2017 Tax Planning Checklist: Provisions

Provision for Holiday Pay and Long Service Leave

Whilst it is sound accounting practice to make provision in the financial accounts for the commitment that is emerging for Holiday Pay and Long Service Leave – a tax deduction is not available   until the expense is paid.
This requires an adjustment to be made each year to claim a taxation deduction for the amount paid irrespective of the accrued liability.

Provision for Doubtful Debts

Irrespective of the amount that you have provided for doubtful debts, you only receive a tax deduction for bad debts written off.