SearchRates payment in advance?
John asks:
(updated on Wednesday, June 19th 2013)
Does Determination E12 cover expenses paid for in advance by individuals as well as businesses? I want to reduce a high income this tax year by paying (rental property) rates in advance, my income next tax year will be lower.
Our Experts Answer:
The prepayment of an expense is generally recorded as an asset in the balance sheet until such time as the expense is actually incurred. Much in the same way as income is not recognised until it has actually been earned. Until it is earned, the receipt of funds in advance is considered a liability. You can't arbitrarily alter the incidence of your taxable income by making prepayments.
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