HomeHome SearchSearch MenuMenu Our productsOur products

Revealed: Six ways to increase your chance of qualifying for a doubtful debt allowance

by , 24 July 2014
A debt is doubtful if it's passed its settlement date and you've tried everything to collect it but all your efforts have failed.

The good news is the Income Tax Act recognises that it's not easy to collect debt. As a result, it empowers you to claim a doubtful debt allowance.

Read on to discover six ways to increase your chance of qualifying for a doubtful debt allowance so you can avoid losing more money than you have to.

*********** Advertisement ***********

Legally pay less tax
 

139 reasons SARS doesn't want you to see this

***************************************

Do these six things to increase your chance of qualifying for a doubtful debt allowance


The Practical Tax Loose Leaf Service says to qualify for the doubtful debt allowance you must make some effort to collect the outstanding amounts.
 

You should also:

#1: Levy interest on overdue accounts;

#2: Offer settlement discounts;

#3: Send reminders to the debtor;

#4: Send letters of demand;

#5: Phone the debtor to follow up on outstanding payment; and in the final instance

#6: Pursue legal action.
 

Important: If you sell assets or stock to a debtor, try recovering the remaining assets or stock that he hasn't used or paid yet.
 

It's also a good idea to have a debt management policy in place and consistently apply it.
 

If you do all this, you can justify to SARS that the debt is potentially irrecoverable and you're more likely to qualify for the allowance when your customers fail to pay on time.
 

Well there you have it: If there's a slight chance you can't recover a debt, you can claim a doubtful debt allowance to shrink your tax burdens. Just do the six things we've outlined to increase your chance of qualifying for a doubtful debt allowance.
 

*********** Product endorsement ************

Every South African tax law explained by our experts
 

The Practical Tax Loose Leaf Service offers you:
 

  • All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
  • Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
  • Red flags you need to watch out for and the penalties you'll face if you don't respect them.
  • Sample templates at your disposal, ready to be filled in, customised and printed.


Click here for more details

*********************************************




Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>