When can I claim a bad debt as a tax deduction?

You have to satisfy a few conditions:-

There must have been an enforceable sale.
All reasonable attempts have been made to collect it.
The decision to write off it off is evidenced in writing.
The customer hasn’t already gone into liquidation or you haven’ t accepted a deal to be paid only x cents in the dollar.

That all said, if you declare income on a cash basis then there is no deduction to be claimed for a bad debt as there wasn’t any taxable income in the first place.

So how do you avoid the cost of a bad debt? Look out for future blogs including what the real costs of a bad debt can be.

Or better yet, ask us.

We have dozens and dozens of ideas and strategies from dealing with hundreds of clients from many different industries.

At MRS, we will spend today planning for your success.