You can claim GST relief on your bad debts if you meet the conditions and requirements under the GST (General) Regulations.
You can do a self-review to determine if you are eligible to claim bad debt relief by using the checklist, Self-Review Of Eligibility In Claiming Bad Debt Relief. If you satisfy all the conditions, you can proceed to make a claim by including the amount in Box 7 "Input Tax" in the GST F5.
-- IRAS --
How to record a bad debt relief in MoneyWorks accounting software?
Assume you have an old invoice of $10,000 before 7% GST, which you had written off as bad debt. To record the claim of $700 GST as a bad debt relief you need to record using a payment transaction instead of a negative sales invoice (Credit Note). A Payment transaction records the GST as an input tax, whereas the GST in the sales transaction will end up in the output tax section of the Tax Detail report, which will cause the amount to sum up in the Box 6 of the MoneyWorks GST Form 5. Therefore, to include the bad debt relief in the GST Form 5, Box 7, a payment transaction is needed.
Use a payment transaction and pay out using a Contra Bank account (you may name it as Clearing Bank account). The Contra Bank account is just a dummy bank account, which act as a transit between the accounts receivable and bad debts expense account. Use the Bad Debt expense account with an * GST code and enter $10,000 into the Net amount field. Then, use the Bad Debt expense account again on the second line with an A GST code for the $700 GST relief. MoneyWorks has preset the A GST code as “All tax”; that is, whatever amount entered into the Net amount field will be transferred to the GST amount field automatically. Although, the Bad Debt expense account is used in the second line, it serves as a dummy account to allow GST (all tax) to be recorded.
The above payment transaction will:
Debit the Bad Debt expense 10,000
Debit the GST input tax 700
Credit the Contra bank account 10,700
Clear the outstanding sales invoice, which you had written off as bad debt, with a Receipt transaction. Receive the outstanding amount of 10,700 into the Contra Bank account.
The double entry of the Receipt transaction is:
Debit the Contra Bank account 10,700
Credit the Accounts Receivable account 10,700
Once the Contra account is offset with both the payment and receipt transaction, the Contra account will have a zero balance. On the next finalisation of GST, the bad debt relief of $700 will be added to the input tax, Box 7, of the MoneyWorks GST Form 5.
Besides recording the bad debt relief in the Box 7 of the GST Form 5, you have to indicate 'Yes' in Box 11 and state the amount claimed when you do your electronic filing.