Bad debts and overdue payments

(1) Where– (a) the amount specified by a person in a GST return as being the amount of tax payable, or the amount of the refund due, has been calculated taking into account a taxable supply made by that person for consideration; 55 (b) all or any of the consideration remains unpaid, despite its having become due and payable; and (c) reasonable efforts having been made for its recovery, the debt or part of the debt has been written off as a bad debt, the person who furnished the return may, in calculating the amount of tax payable, or the amount of refund due, that is to be specified in the return for the period in which the amount was written off or, where a period of twelve months has not then elapsed since the amount became due and payable, the first return after that period of twelve months elapses, include as an input tax credit the amount of tax included in the previous return that was attributable to the amount written off. (2) Where an amount in respect of which a deduction has been made under sub-section (1) is wholly or partly recovered by a registered person, that person shall include as payable in his GST return for the period during which the amount is recovered the amount previously deducted or, where only part of the amount written off is recovered, such portion of the amount previously deducted as the amount recovered represents as a proportion of the amount written off. (3) Where– (a) the amount specified by a person in a GST return as being the amount of input tax allowable has been calculated taking into account a taxable acquisition made by that person for consideration; (b) all or any of the consideration remains unpaid, despite its having become due and payable; and 56 (c) a period of twelve months has elapsed since the amount became due and payable and the supplier has not, by notice in writing, allowed the recipient an extension of time to pay, the person who furnished the return shall, in calculating the amount of tax payable, or the amount of refund due, in the first return after that period of twelve months elapses, include an amount of output tax equal to the amount of input tax that was allowed in the previous return in relation to the amount of consideration that remains outstanding. (4) Where an amount in respect of which an amount of output tax has been included under sub-section (3) is wholly or partly paid by the recipient to the supplier, that person may include as an allowable input tax credit in his GST return for the period during which the amount is paid the amount previously included as output tax or, where only part of the amount outstanding is paid, such portion of the amount previously included as the amount paid represents as a proportion of the amount outstanding.