Commonwealth Consolidated Acts Commonwealth Consolidated ActsThe amount of forgiveness (called the gross forgiven amount) for the debtor reflects the loss that the creditor makes for tax purposes. It is worked out in 2 steps:
(a) the value of the debt when it was forgiven is worked out on the basis that you were solvent both then and when you incurred the debt; and
(b) the value of the debt is then offset by any consideration given for the forgiveness of the debt.
The difference between the value of the debt and the amount offset is the gross forgiven amount.
If the debt was owed by several debtors, the gross forgiven amount is divided between them equally .
Table of sections
Working out the value of a debt
245 - 50 Extent of forgiveness if consideration is given
245 - 55 General rule for working out the value of a debt
245 - 60 Special rule for working out the value of a non - recourse debt
245 - 61 Special rule for working out the value of a previously assigned debt
Working out if an amount is offset against the value of the debt
245 - 65 Amount offset against amount of debt
Working out the gross forgiven amount
245 - 75 Gross forgiven amount of a debt
245 - 77 Gross forgiven amount shared between debtors