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  • Commercial debt forgiveness

    Situations that attract our attention include entities that have:

    • had a debt forgiven (whether formally or informally)
    • a commercial debt forgiven (see Division 245 of the ITAA 1997 – Forgiveness of a commercial debt), but the gain it represents for the debtor has not been recorded correctly in the tax return
    • had a deemed forgiveness that takes place when a debt is assigned to a party related to the debtor
    • entered into a debt for equity swap and failed to adjust their loss claims.

    For more information on commercial debt forgiveness, see TD 2022/1 Income tax: commercial debt forgiveness – does the exclusion for debts forgiven for reasons of natural love and affection require that the creditor be a natural person?

    Last modified: 24 Aug 2022QC 69464