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  • Bad debts

    We focus on deductions claimed for bad debts, in particular:

    • the genuine nature of bad debts
    • whether it is correct to treat the debt as bad
    • arm's length treatment of debts within closely held groups
    • the treatment, by related entities, of income reflecting the debt
    • the documentation and evidence supporting the claims.

    We also look at the correct application of the deduction rules, in particular:

    • the period when the debts were written off
    • the amount being claimed
    • whether there is a lending business or the debt is included in income
    • the rules being used for individuals, companies and trusts.

    For more information on bad debts, refer to:

    Last modified: 24 Aug 2022QC 69461