There is no provision as such in gst. The technical requirement to claim a bad debt write-off and recover the related HST requires the company to establish both the consideration and the tax are a bad debt. If you claimed a bad debt adjustment on line 107 and you later receive a payment towards that debt, you have to make an adjustment in your line 105 calculation if you are filing electronically (or line 104 if you are filing a paper GST/HST return) for the reporting period in which the amount is recovered. Item 2:Accounting for GST on imported services. 2. A decreasing adjustment for a bad debt can arise in respect of a supply if either : you attributed the GST on the supply on your BAS in a previous tax period, or Canada Revenue Agency (CRA) is challenging taxpayers regarding recovering the HST component of their bad debts. Example of 100 Percent of Bad Debt HST Recovery. If you account for GST on a non-cash basis, you may have an adjustment relating to a bad debt if: you write off a bad debt relating to a taxable sale you made; a debt relating to a taxable sale you made has been overdue for 12 months or more; you recover an amount for a bad debt you had already written off Bad debt adjustment. Given VAT/GST is levied on gross revenue, any irreversible VAT/GST liabilities arising from bad debts could have a crippling impact on businesses. If bad debts are on account of deficiency in supply of services, or tax charged being greater than actual tax liability, or goods returned, GST paid on the same is refundable subject to fulfilment of the prescribed conditions. Bad Debts can be said to be uncollectible debt or uncollectible accounts receivables or uncollectible sundry debtors or any other nomenclature used in trade, business or commerce by the organisation. From a policy perspective, there are really two main schools of thought around the treatment of bad debts. Company A can then make an adjustment of $156.46 to reduce the HST remittance at any time in the four years following the date when the bad debt write-off occurred. If goods have been sold and invoice has been raised, then tax has to be collected by the seller and paid to the government by way of credit or cash, as the case may be. Using the same example, Company A sells $2,260 of items on account to Company B, which includes $260 of HST. Under GST Ruling 2002/2, a decreasing GST adjustment needs to be made to account for the writing off of bad debts. Item 4:Royalty; Item 5:GST treatment on drop shipment ; Item 6:Foreign exchange ; Item 7:Financial Guarantee Contract; Item 8:GST treatment on Office holders/ directors’ fees; Item 9:Adjustment with credit or debit note; AMENDMENT; 2: 2/2014 Item 3:Claiming bad debt relief. If user decide not to claim the GST bad debt relief, they can choose to untick it. Under purchase, there is also “bad debt” relief, where business did not do payment for supplier more than 6 months, there for the input tax claim from 6 months ago will have to be return to Kastam, so, bad debt relief goes both ways…this is a fair rules. Pankaj Rawat (GST … In order to do so, the ruling states that: GST must have been attributed. Can i get the GST refund in respect of BAD DEBTS? Claiming GST/HST on Bad Debts. What is provision regarding the GST collected & paid to the government but that sale become bad debt. Meaning of Bad Debts. Bad debt recovery. Therefore, GST already paid on bad debts, as used in the trade parlance, cannot be adjusted. Tax Treatment of Bad Debts under GST Act 2017. Debt relief, they can choose to untick it thought around the treatment of debts. 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