40Bad debts

#### 40 Bad debts (1) Where: (a) a debt is a bad debt and is written off as such by a person during a financial year; and (b) the debt has been brought to account by the person as a receipt of a kind referred to in section 24, 25, 27, 28 or 29 derived by the person in any financial year in relation to a petroleum project; then, at the time at which the debt is written off and in relation to: (c) the petroleum project; or (d) if, at that time, there is a combined project in relation to which the petroleum project is a pre‑combination project—the combined project; the person shall be taken for the purposes of this Act to have incurred an amount of: (e) where at or before the time at which the debt is written off the person has not incurred any general project expenditure or closing‑down expenditure in relation to the petroleum project or the combined project (including any pre‑combination project in relation to the project)—exploration expenditure; (f) where at or before the time at which the debt is written off the person has incurred general project expenditure, but has not incurred any closing‑down expenditure, in relation to the petroleum project or the combined project (including any pre‑combination project in relation to the project)—general project expenditure; or (g) where at or before the time at which the debt is written off the person has incurred closing‑down expenditure in relation to the petroleum project or the combined project—closing‑down expenditure; equal to the amount of the debt. (2) If a debtor, after incurring a debt that has been brought to account as mentioned in paragraph (1) (b), becomes bankrupt or executes a personal insolvency agreement for the benefit of creditors: (a) where, in the opinion of the Commissioner, no amount will be paid on account of the debt—the debt; or (b) where, in the opinion of the Commissioner, an amount less than the amount of the debt will be paid on account of the debt—so much of the debt as exceeds the amount that, in the opinion of the Commissioner, will be so paid; shall be deemed to be a bad debt. (3) Where a person receives an amount in respect of a debt to which subsection (1) applies, that amount shall for the purposes of this Act be taken to be a receipt of the kind referred to in paragraph (1)(b) derived by the person in relation to: (a) the petroleum project referred to in that paragraph; or (b) if, at the time at which the amount is received, there is a combined project in relation to which the petroleum project referred to in that paragraph is a pre‑combination project—the combined project.