Income Tax Assessment Act 1936
This section applies to a trust that:
(a) can deduct in the income year (the test period ) an amount:
(i) under section 51 or 63 in respect of the writing off of the whole or part of a debt, incurred in the income year, 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 incurred in the income year; and
(b) was a non-fixed trust at any time in the test period; and
(c) 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:
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