Bad Debt Relief

When debts cannot be recovered, you may apply for bad debt relief to recover GST charged but unpaid by your customers. Should your customer subsequently pay you, you must repay the relief claimed.

Bad Debts

A bad debt situation occurs when money that is owed cannot be recovered. You can apply for bad debt relief from the Comptroller of GST for return of the output tax previously accounted for and paid by you.

On the other hand, if you as a customer have not paid your supplier within 12 months from the due date of payment, you are required to repay to the Comptroller the input tax that you have previously claimed (if any). For more details, please refer to If I have claimed GST before paying my supplier .

Qualifying for Bad Debt Relief

You have to meet the following conditions to qualify for bad debt relief:

  1. You have supplied goods or services for a consideration in money and have accounted for and paid GST on the supply;
  2. You have written off the whole or any part of the consideration for the supply as a bad debt in your accounts;
  3. A period of 12 months beginning with the date of supply has elapsed or the debtor has become insolvent before the period of 12 months has elapsed;
  4. You have taken reasonable steps to recover the debts;
  5. The value of the supply is equal to or less than its open market value; and
  6. In the case of goods, the ownership must have been transferred to your customer

Claiming Bad Debt Relief

  1. Complete the Self-Review of Eligibility to Claim Bad Debt Relief (217KB) checklist.
  2. Proceed to make a claim in Box 7 (input tax and refunds claimed) of your GST return if you satisfy all the conditions in the self-review checklist.

You need not submit the self-review checklist to IRAS but you should keep it as part of your records. You may be asked to provide this checklist in the course of an audit.

Time Limit for Claiming Bad Debt Relief

The bad debt relief claim has to be made within 5 years from the date of your supply.

Date of tax invoice: 1 Jan 2015

Allowable period to claim bad debt relief: 1 Jan 2015 to 31 Dec 2019.

Repaying IRAS after Recovering Bad Debts

When you recover a bad debt i.e. receive payment from your customer after you have claimed Bad Debt Relief, you should repay to the Comptroller the amount calculated according to the following formula:

Repaying IRAS After Recovering Bad Debts

Stating Amount Repayable in GST Return

The amount repayable should be included in Box 6(output tax due) of your GST return for the prescribed accounting period in which the payment is received.

You sold a batch of goods worth $10,000 to Customer B and accounted for output tax of $700.

Subsequently, Customer B defaults payment and you claim back the $700 output tax from IRAS as Bad Debt Relief.

A few months later, Customer B decides to pay you $8,000. You are required to repay part of your claim for Bad Debt Relief as follows:

Amount to be repaid to IRAS = $700 x $8,000/$10,700 = $523.36


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