Section DB 32 — Income Tax Act 2007: Bad debts owed to estates

DB 32 Bad debts owed to estates When this section applies (1) This section applies when— (a) a debt owing to a person at the date of their death is, in an income year,— (i) assessable income of the person; or (ii) assessable income of the trustee of their estate; and (b) the trustee writes off some or all of the debt as bad because it is not recoverable. Deduction (2) The following persons, in the following order, are allowed a deduction for the amount of the debt written off: (a) first, the trustee, to the extent of assessable income derived as trustee income in the income year; and (b) second, any beneficiary who has a vested interest in the capital of the estate, to the extent of assessable income derived in the income year by or in trust for the beneficiary, and to the extent to which the amount is chargeable against the capital of the beneficiary; and (c) third, the trustee or a beneficiary denied a deduction for the balance in the income year; each is allowed a deduction, as described in paragraph (a) or (b), in the next tax year, and so on. Link with subpart DA (3) This section supplements the general permission. The general limitations still apply. Defined in this Act: amount , assessable income , deduction , general limitation , general permission , income year , supplement , trustee , trustee income , Compare: 2004 No 35 s DB 24