Income tax: where invoices for the cost of goods and/or services include offset amounts of a capital nature, is the deduction under subsection 51(1) of the Income Tax Assessment Act 1936 for the cost of the goods and/or services limited to the net amount payable under the invoices?

No. The total cost of the goods and services is a liability incurred for the purposes of subsection 51(1). Offsets arising from any arrangements on capital account between the parties do not operate to reduce the amount of the liability incurred.