INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 9B - State Bank of NSW  

SECTION 121EQ   EFFECT OF PRE-FIRST TAXING TIME PROVISION FOR BAD DEBTS  

121EQ(1)   [Application]  

This section applies to a debt owing to the NSW State Bank that existed immediately before the first taxing time if at that time there was, in the accounting records of the Bank, a doubtful debt provision in respect of the debt described as a specific provision .

121EQ(2)   [Where debt allowable deduction to NSW State Bank]  

If this section applies to a debt, a deduction under this Act that, apart from this subsection, would be allowable to the NSW State Bank for the writing off of the whole or part of the debt as bad is not allowable to the extent that the amount written off equals the doubtful debt provision limit (see subsection (3)) in respect of the debt immediately before the writing off occurs.

121EQ(3)   [Doubtful debt provision limit]  

The doubtful debt provision limit , in respect of a debt at a particular time, is:

(a) if subsection (2) has not applied in relation to any previous writing off of part of the debt - the amount of the specific provision in respect of the debt mentioned in subsection (1); or

(b) in any other case - the amount of the specific provision in respect of the debt mentioned in subsection (1), reduced by the sum of the amounts of deductions that, because of a previous application of subsection (2) in respect of the writing off of one or more parts of the debt as bad, have not been allowable to the Bank.

121EQ(4)   [Debt of particular class covered by specific provisions]  

If:

(a) this section does not apply to a debt that existed immediately before the first taxing time; and

(b) the debt is included in a class of debts existing immediately before that time where, at that time, there was, in the accounting records of the NSW State Bank, a doubtful debt provision in respect of the class described as a specific provision ;

this section applies to the debt as if there were a specific provision in respect of the debt of the kind mentioned in subsection (1) of an amount worked out using the formula:

Amount of specific provision       for the class

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Amount of the debt       Sum of the amounts of           debts   included in the class