Document ID: chunk:federal_register_of_legislation:C2004C00927:clause:1_4:p4
Version: federal_register_of_legislation:C2004C00927
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 4/8)
Character Range: 61247–63799

the amount of the expenditure reduced by the the maximum amount that you can deduct for the expenditure for each earlier income year.

           Step 2. Work out the remaining loan period as follows:

                • For the income year in which the *period of the loan begins, it is the period of the loan (as determined at the end of the income year).
                • For a later income year, it is the period from the start of the income year until the end of the period of the loan (as determined at the end of the income year).

           Step 3. Divide the remaining expenditure by the number of days in the remaining loan period.
           Step 4. Multiply the result from Step 3 by the number of days in the remaining loan period that are in the income year.
Example: To continue the example in subsection (2): suppose the original period of the loan is 4 years starting on 1 September 1997. What is the maximum amount you can deduct for the expenditure for 1997‑98?

 Applying the method statement:

 After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure).

 After Step 2: the remaining loan period is 4 years from 1 September 1997 (1,461 days).

 After Step 3: the result is $1,500 divided by 1,461 = $1.03.

 After Step 4: the result is $1.03 multiplied by 302 days = $310.06.

 Suppose you repay the loan early, on 31 December 1998. What is the maximum amount you can deduct for the expenditure for 1998-99?

 Applying the method statement:

 After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure) reduced by $310.06 (the maximum amount you can deduct for 1997-98) = $1,189.94.

 After Step 2: the remaining loan period is the period from 1 July 1998 to 31 December 1998 (183 days).

 After Step 3: the result is $1,189.94 divided by 183 days = $6.50.

 After Step 4: the result is $6.50 multiplied by 183 days = $1,189.94.

Meaning of period of the loan

 (5) The period of the loan is the shortest of these periods:
 (a) the period of the loan as specified in the original loan contract;
 (b) the period starting on the first day on which the money was borrowed and ending on the day the loan is repaid;
 (c) 5 years starting on the first day on which the money was borrowed.

When deduction not spread

 (6) If the total of the following is $100 or less:
 (a) each amount of expenditure you incur in an income year for borrowing money you use during that income year solely for the *purpose of producing assessable income;
 (b) for each amount of expenditure you incur in