Did you know that you could write off a debt that is not necessarily bad in the strict legal sense?
However, you must make a bona fide assessment, based on sound commercial considerations, of the extent to which the debt is bad and importantly this decision is documented in some form of written record. It is a question of fact when a debt is bad and some reasonable steps should be taken to prove the commercial decision mentioned above.
Some other rules must be satisfied before claiming a bad debt deduction. Please contact us on 02 9957 4033 if you need any assistance and we can review your debtor position as part of our year-end tax planning.
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