A New Tax System (Goods and Services Tax Transition) Act 1999

Part 3 - Agreements spanning 1 July 2000  

Division 2 - Agreements also spanning 1 July 2005  

Subdivision B - Payment of GST payable by recipients of supplies  

15G   Bad debts  

(1)    
This section has effect if:

(a) you are the recipient of a taxable supply for which the GST is payable by you because of this Division; and

(b) the whole or part of the consideration for the supply has not been received by the supplier; and

(c) the supplier writes off as bad the whole or a part of the debt, or the whole or a part of the debt has been overdue for 12 months or more.

(2)    
Section 21-5 of the GST Act does not apply to the taxable supply.

(3)    
Instead, you have a decreasing adjustment equal to 10% of the amount written off, or 10% of the amount that has been overdue for 12 months or more, as the case requires. However, you cannot have an adjustment under this section if you account on a cash basis.

(4)    
You have an increasing adjustment if:

(a) you were the recipient of a taxable supply in relation to which you had a decreasing adjustment under subsection (3); and

(b) you subsequently pay to the supplier the whole or a part of the amount written off, or the whole or a part of the amount that has been overdue for 12 months or more, as the case requires.

The amount of the increasing adjustment is 10% of the amount paid.