Document ID: chunk:federal_register_of_legislation:C2025C00014:section:399a:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 399A (pt 1/2)
Character Range: 1993033–1995602

399A  Modified application of bad debt etc. provisions
 (1) For the purposes of applying this Act in calculating the attributable income of the eligible CFC for the eligible period:
 (b) section 63D of this Act is to be disregarded; and
 (c) subsection (2) of this section has effect.
 (2) Where:
 (a) apart from this subsection, an amount would be a notional allowable deduction to the eligible CFC under section 8‑1 or 25‑35 of the Income Tax Assessment Act 1997 in respect of the writing off of a debt as bad; and
 (b) the debt was created or acquired in the ordinary course of a money‑lending business of the eligible CFC that carries on that business; and
 (c) assuming that income:
 (i) that has been derived by the eligible CFC in respect of the debt; or
 (ii) that would have been reasonably likely to have been derived by the eligible CFC in respect of the debt if it had not become bad;
  were instead derived by the eligible CFC during periods to which it may reasonably be attributed, there would be a part or parts (which part or the total of which parts is in this subsection called the notional exempt income period) of the period (in this subsection called the eligible debt holding period) beginning when the debt was so created or acquired, and ending when it was written off, in respect of which some or all of that income would not be included in the notional assessable income of the eligible CFC for any statutory accounting period;
then only a proportion of the amount referred to in paragraph (a) is a notional allowable deduction, being the proportion calculated using the following formula:

where:
Eligible debt holding period means the number of days in the eligible debt holding period.
Notional exempt income period means the number of days in the notional exempt income period.
Eligible debt term means:
 (d) where the debt was acquired from a person other than an associate—the number of days in the eligible debt holding period; or
 (e) in any other case—the number of days in the period beginning on the day on which the debt was created (whether by the eligible CFC or another person) and ending at the end of the day on which it was written off.
 (3) For the purposes of subsection (2):
 (a) where a debt that is written off was acquired from another person, the creation and any previous acquisition of the debt is to be disregarded, other than for the purposes of paragraph (2)(e); and
 (b) if, on the assumption in paragraph (2)(c), income would be derived by the eligible CFC during a period before the first statutory accounting