The ATO may require evidence of a bad debt when you deduct it from your tax bill. You can provide supporting evidence through invoices, notices, and correspondence with the debtor. You should also have a record of the date when the debt was incurred, the amount of the debt, and the reasons why it is considered uncollectible. You also need a record of your intention to write the debt off as ‘bad.’ You need to keep records for at least five years in case of an audit.