Section EZ 40 — Income Tax Act 2007: Accrued income written off

EZ 40 Accrued income written off (1) A deduction is allowed to a person for an amount written off by the person as a bad debt in respect of a financial arrangement where and to the extent that— (a) the person derives income in respect of the financial arrangement under any of sections EZ 35 , EZ 37(4) , EZ 38 , and EZ 42 ; and (b) the amount written off is attributable to that income. (2) A deduction is allowed to a person for an amount written off by the person as a bad debt in respect of a financial arrangement (not being an amount allowed as a deduction under subsection (1)) where— (a) the person— (i) carries on a business which comprises holding or dealing in such financial arrangements; and (ii) is not associated with the person owing the amount written off; or (b) the financial arrangement is a trade credit and the person carries on a business of dealing in the goods or services for which the trade credit is a debt. (3) Where a person receives a security payment in relation to a loss and a deduction is denied to the person for the loss other than under this subsection, the person is allowed a deduction for the loss no greater than the amount of the security payment. (4) A deduction for bad debts is allowed under this section only where the requirements of section DB 31(1) and (5) have been met. (5) A deduction for a share loss (within the meaning of section DB 24 ) is allowed under subsection (3) only where the requirements of section DB 24 have been met. Compare: 2004 No 35 s EZ 37