Document ID: chunk:federal_register_of_legislation:C2004C00927:clause:1_4:p6
Version: federal_register_of_legislation:C2004C00927
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 6/8)
Character Range: 65885–68915

of lending money. However, you cannot deduct more than the expenditure you incurred in buying the debt.

Writing off part of a debt you have bought

 (3) You can deduct a part of a debt if:
 (a) you write off that part as bad in the income year; and
 (b) you bought the debt in the ordinary course of your *business of lending money.

 (4) However, the maximum that you can deduct under subsection (3) for one or more income years is the amount (if any) by which:
 • the expenditure you incurred in buying the debt;
exceeds:
 • so much of the debt as has not yet been written off as bad.

Special rules affecting deductions under this section

 (5) Your entitlement to deductions under this section may be affected by the rules described in the table.

  Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936.

Rules affecting deductions for bad debts
Item                                      For the rules about this situation:                                                                                                                                                                          See:
  1                                       A company cannot deduct a bad debt if there has been a change in ownership or control of the company and the company has not carried on the same business.                                                   sections 63A and 63C
  2                                       A company cannot deduct a bad debt in various other cases that may involve trafficking in bad debts.                                                                                                         sections 63B and 63D
  3                                       A deduction under this section is reduced if the debt is forgiven and the debtor and creditor are companies under common ownership and agree for the creditor to forgo the deduction to a specified extent.  section 245‑90 of Schedule 2C

25-40  Loss from profit-making undertaking or plan

 (1) You can deduct a loss arising from the carrying on or carrying out of a profit-making undertaking or plan if any profit from that plan would have been included in your assessable income by
section 15-15 (which is about profit-making undertakings and plans).

When section does not apply

 (2) You cannot deduct a loss under subsection (1) if the loss arises in respect of the sale of property acquired on or after 20 September 1985.

Note: If you sell property you acquired before 20 September 1985 for profit-making by sale, you may be able to deduct a loss on the sale: see section 52 of the Income Tax Assessment Act 1936.

Notice to Commissioner

 (3) You can deduct a loss under subsection (1), insofar as it arises in respect of property, only if:
 (a) you notified the Commissioner that you acquired the property for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or plan