As part of the 2012-13 Budget, the Government announced it would ensure a more consistent tax treatment for bad debts between related parties that are not members of a tax consolidated group. The measure would deny the creditor a tax deduction for a bad debt written-off, where the debtor is a related party. In addition, the corresponding gain to the debtor would be disregarded. It is intended that the measure would introduce better symmetry between the tax treatments of the creditor and the borrower where they are related parties. The measure is proposed to apply from 7.30pm (AEST) on 8 May 2012. Treasury has now issued a discussion paper on the proposal.
The paper is available on the Treasury website.
COMMENTS are due by 10 August 2012.
[LTN 136, 17/7]