21 Jan 1313 Administrative treatment for bad debt write-offs
On 8 May 2012, the Government announced a proposal to deny a tax deduction to a lender who writes off a bad debt owed to it by a related party. This measure will impact related parties which are not in a tax consolidated group. The corresponding gain to the debtor will not be taxed.
The Government has announced that it will release a discussion paper shortly.
The measure will be effective from 7.30pm (AEST) 8 May 2012. The ATO has now published the administrative treatment that it will apply pending the enactment of the changes.