Commonwealth Consolidated Acts Commonwealth Consolidated ActsA debt is forgiven if and when the creditor assigns the right to receive payment of the debt to another entity (the new creditor ) and the following conditions are met:
(a) either the new creditor is the debtor's * associate or the assignment occurred under an * arrangement to which the new creditor and debtor were parties;
(b) the right to receive payment of the debt was not acquired by the new creditor in the ordinary course of * trading on a market, exchange or other place on which, or facility by means of which, offers to sell, buy or exchange securities (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ) are made or accepted.
Note 1: Division 16E of Part III of the Income Tax Assessment Act 1936 brings to account gains and losses on some securities on an accruals basis.
Note 2: This Division also applies if an assigned debt is subsequently forgiven by the new creditor. Section 245 - 61 tells you how to work out the value of the debt in that case.