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Debt Forgiveness Issues

Published on 28 Feb 2008 | Took place at Leonda by the Yarra, Hawthorn, VIC

This event was part of the Breakfast Club series.

The forgiveness and assignment of loans and other debts is an everyday issue for practices with SME clients. There are multiple tax issues to consider when loans and other debts are forgiven or assigned.

This seminar addressed a number of tax issues.

Individual sessions

Debt forgiveness

Author(s):  Noel BEHARIS

This paper addresses the following tax issues:

  • what debts are caught by the commercial debt forgiveness rules?
  • what happens if an unpaid trust entitlement is forgiven?
  • what needs to happen for a debt to be "forgiven"?
  • will a debt be forgiven if it is merely written off in the accounts?
  • are the commercial debt forgiveness rules really a problem?
  • the interaction of Division 7A and debt forgiveness
  • what happens if a company forgives a loan previously caught by Division 7A?
  • the dangers in forgiving debts owed to trusts and companies which have made family trust and interposed entity elections
  • when is a debt forgiveness assessable as income?
  • can a capital loss be claimed in respect of a forgiven loan?
  • what are the dangers of assigning loan accounts?
Materials from this session: