Division 3 - Deductions  

Subdivision A - General  


63(1AAA)   [Limited application]  

This section (other than subsection (1A)) does not apply to the 1997-98 year of income or a later year of income.


Section 25-35 of the Income Tax Assessment Act 1997 deals with the deductibility of bad debts in those income years.

63(1)   [Allowable deductions]  

Debts which are bad debts and are written off as such during the year of income, and:

(a) have been brought to account by the taxpayer as assessable income of any year; or

(b) are in respect of money lent in the ordinary course of the business of the lending of money by a taxpayer who carries on that business;

shall be allowable deductions.

63(1AA)   [Reduction of subsec (1) deduction]  

A deduction otherwise allowable under subsection (1) to a creditor in respect of a debt is reduced to the extent mentioned in subparagraph 245-90(3)(b)(i) of Schedule 2C if an agreement between the debtor and the creditor is made as mentioned in paragraph 245-90(3)(a) of Schedule 2C .

63(1B)   [Motor car lease payments]  

If any debts relating to lease payments that have, or will, become liable to be made under a lease of a motor car to which Division 42A in Schedule 2E applies are written off as bad debts by a taxpayer, the maximum amount that the taxpayer can deduct under subsection (1) for those debts is the amount of the finance charge for the notional loan that the taxpayer is taken under that Division to have made to the lessee.

63(1C)   [Interpretation]  

Expressions used in subsection (1B) that are defined in Division 42A in Schedule 2E have the same meanings as in that Division.

63(2)   [Bankrupt debtor]  

If a debtor, after incurring a debt so brought to account, or in respect of money so lent, becomes a bankrupt, or executes a deed of assignment or arrangement for the benefit of his creditors, the debt (where, in the opinion of the Commissioner, no amount will be paid on account of the debt) or the amount by which, in his opinion, the amount which will be received on account of the debt will be less than the debt, shall be deemed to be a bad debt.

63(2A)   [Limited application of subsec (3)]  

Subsection (3) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section 20-25 of the Income Tax Assessment Act 1997 .


Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.

63(3)   [Bad debts recovered]  

Where in the year of income, a taxpayer receives an amount in respect of a debt for which a deduction has been allowed to the taxpayer under section 51 or this section, the taxpayer's assessable income shall include the lesser of:

(a) the amount received; and

(b) the deduction, as reduced by any amount previously included in the taxpayer's assessable income under this subsection in respect of the debt.

63(4)   [Partial bad debts]  

Where a part of a debt is bad, this section applies as if the part were an entire debt that is bad.

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