Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-C - Deducting bad debts  

Operative provisions

SECTION 165-132   When tax losses resulting from bad debts cannot be deducted  

165-132(1)  

If:

(a) a company can deduct a debt (or part of a debt) that it wrote off as bad in an income year; and

(b) because the company failed to meet a condition in section 165-123 (about the company maintaining the same owners), it could not have deducted the debt (or part) apart from section 165-126 (about the company satisfying the business continuity test); and

(c) the company wrote off the debt after the *test time worked out under section 165-126 ; and

(d) because of the deduction, the company has a *tax loss for that income year, or there was an increase in the amount of its *tax loss for that income year; and

(e) the company carried on a *business during that income year for the purpose, or for purposes including the purpose, of securing a deduction for the debt (or part) by relying on section 165-126 ;

the company cannot deduct the *tax loss for a later income year, or cannot deduct it to the extent of the increase, unless it also satisfies the *business continuity test for the later income year (the business continuity test period ).

165-132(2)  

Apply the test to the *business that the company carried on immediately before the *test time worked out for section 165-126 .

For the business continuity test: see Subdivision 165-E .