• What if the same debt is forgiven at different times?

    If the same debt is forgiven at different times, only the first forgiveness is treated as a dividend.

    Example 3

    In example 2, assume that Maxine does not seek to recover the debt. Time passes and Maxine's recovery of the debt becomes barred under a statute of limitations.

    The debt is treated as forgiven at the time the debt parking arrangement is entered into in the 2005-06 income year. The debt is also forgiven when recovery subsequently becomes statute barred. Only the first debt forgiveness is treated as a dividend.

      Last modified: 12 Aug 2010QC 17349