I loaned more than $100,000 to a friend to help them buy a house. There was no formal agreement signed and the amounts were transferred to their bank account. Unfortunately, this ended our relationship due to failed repayments and huge delays. I was able to recover most of that amount and at some point I had to engage a lawyer to send out a "Letter of Demand" to which the debtor responded and made further payments. The outstanding balance is a little over $20,000 and I have no way of recovering the balance without it affecting me financially and I'm unable to contact the debtor.
I have the bank statements, letter of demand, repayment records and other correspondence between the debtor, my lawyer and myself to prove this wasn't a gift.
Given the size of the amount, is there a way for me, as an individual, to write-off this loan and claim bad debt deductions?
Does the debtor face any tax implications, if I tip-off the ATO?
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