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Bad debts

We focus on the correct application of the rules where deductions are claimed for bad debts.

Last updated 23 August 2022

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: