Hi all,
What are the tax implications/treatment when a customer goes bankrupt and can no longer pay the money they owe us?
Is there any deduction/benefit that can be claimed on income tax?
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If you account for income on a cash basis i.e. you don't recognise an amount as income until it is paid, you do not need to make any adjustment to your income.
If you account for income on an accruals basis i.e. recognise an amount of income at the time of invoicing or earlier, you may be able to claim a deduction for the bad debt. If this is the case details the eligibility requirements are included in this tax ruling.