INCOME TAX ASSESSMENT ACT 1997 - SECT 25.95 Deduction for work in progress amounts

INCOME TAX ASSESSMENT ACT 1997 - SECT 25.95

  (1)   You can deduct a * work in progress amount that you pay for the income year in which you pay it to the extent that, as at the end of that income year:

  (a)   a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related; or

  (b)   you reasonably expect a recoverable debt to arise in respect of the completion or partial completion of that work within the period of 12 months after the amount was paid.

  (2)   You can deduct the remainder (if any) of the * work in progress amount for the following income year.

  (3)   An amount is a work in progress amount to the extent that:

  (a)   an entity agrees to pay the amount to another entity (the recipient ); and

  (b)   the amount can be identified as being in respect of work (but not goods) that has been partially performed by the recipient for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work.

  (4)   An amount does not stop being a work in progress amount merely because it is paid after a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related.