The Australian Taxation Office (ATO) has issued guidance on deductions for unrecoverable income (bad debts).
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Deductions for unrecoverable income (bad debts)
As a business owner, you may be able to claim a deduction for income that cannot be recovered from a customer or debtor. This unrecoverable income is also known as a 'bad debt'.
Income tax and bad debts
The accounting method you use to account for your assessable income affects whether you can claim a bad debt deduction:
Acc…