Income Tax Assessment Act 1936
This section applies to a trust that:
(a) can deduct in the income year an amount:
(i) under section 51 or 63 , or under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt as bad; or
(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) was a fixed trust at all times in the period (the test period ):
(i) if the debt was incurred in an earlier income year - beginning on the day the debt was incurred and ending at the end of the income year; or
(ii) if the debt was incurred in the income year - consisting of the income year; and
(c) was not a widely held unit trust at all times in the test period; and
(d) was not an excepted trust at all times in the test period.
Subdivisions 709-D and 719-I of the Income Tax Assessment Act 1997 also affect when a trust that used to be a member of a consolidated group or MEC group may deduct a debt that used to be owed to a member of the group and that the trust writes off as bad.
The trust cannot deduct the amount unless it meets either: