GST Bad-Debt Relief: Eligibility Checklist and Recovery Adjustments

Key steps and distinctions

The supplier must have made a monetary supply, accounted for and paid the GST, and written off the consideration as bad debt. Twelve months must have elapsed since supply unless the debtor became insolvent earlier, and reasonable recovery efforts must have been made. The supply cannot exceed open-market value, goods ownership must have transferred, and a claim must be within five years of supply. Keep invoices, proof of output tax, write-off and recovery efforts, plus a dedicated bad-debt-refund record showing payments and outstanding amounts. Retention runs for the later of the stated five-year supply-period requirement and three years after claim. Use the rate prevailing when the supply was made, not the current rate. Attribute specified payments to the identified supply; unallocated payments for different dates are applied chronologically, while same-day supplies use the proportional method. An eligible claim goes into Box 7, with the required Box 11 indication and amount. If payment is later recovered, repay the corresponding relief as output tax in Box 6 for that receipt period. The checklist’s 7% numerical examples are historical illustrations, not the rate for every claim.