INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
This section does not apply to the 1997-98 year of income or a later year of income.
To work out the deductibility of a tax loss that results from a debt being written off as bad in the 1997-98 year of income or a later year of income: see section 63CA .
(a) a debt that is written off by a taxpayer, being a company, as a bad debt during a year of income is an allowable deduction;
(b) the debt would not, but for subsection 63C(1) , be an allowable deduction by reason of a change that has taken place in the beneficial ownership of shares in the company or in any other company;
(c) the change referred to in paragraph (b) occurred before the debt was written off as a bad debt;
(d) by reason that the debt is an allowable deduction -
(i) the company incurred in that year of income a loss for the purposes of section 79E , 79F , 80 , 80AAA or 80AA that the company would not otherwise have incurred; or
(ii) a loss for the purposes of section 79E , 79F , 80 , 80AAA or 80AA that the company would otherwise have incurred in that year of income has been increased; and
(e) the Commissioner is satisfied that the company carried on a business during that year of income for the purpose, or for purposes that included the purpose, of securing that a deduction would be allowable in respect of the debt by virtue of subsection 63C(1) ,
the loss, or the increase in the amount of the loss, as the case may be, shall not be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA in relation to a later year of income unless -
(f) the company carried on at all times during that later year of income the same business as it carried on immediately before the change referred to in paragraph (b) took place; and
(g) the company did not, at any time during that later year of income, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change referred to in paragraph (b) took place. 80F(2) [Part debt write offs]
Where a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.
This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.