How do I write off invoices that will never be paid?
You can only claim a bad debt deduction for amounts you have included in your assessable income, either in your tax return for the year you claim the deduction or in an earlier income year.
Step 1: Determine if you are operating on a Cash or Accrual basis.
Step 2a: If you calculate the BAS on a Cash basis then you can:
Step 2b: If you calculate the BAS on an Accrual basis then you need to:
When a specific invoice is actually written off, this is done by creating a credit note in the accounting software that specifically offsets the targeted invoice.
1. Create a Bad Debts Account Code
2. Enter a Credit Note using the Bad Debts Account Code.