Income Tax Assessment Act 1997
View history note
Hide history noteSECTION 245-55 General rule for working out the value of a debt 245-55(1)
The value of your debt at the time (the forgiveness time ) when it is *forgiven is the amount that would have been its *market value (considered as an asset of the creditor) at the forgiveness time, assuming that:
(a) when you incurred the debt, you were able to pay all your debts (including that one) as and when they fell due; and
(b) your capacity to pay the debt is the same at the forgiveness time as when you incurred it.
245-55(2)
However, the value of the debt at the forgiveness time is the sum of the following amounts, if that sum is less than the amount applicable under subsection (1):
(a) what would have been the amount applicable under subsection (1) if there had been no change, from the time the debt was incurred until the forgiveness time, in any rate of interest, or rate of exchange between currencies, that affects the *market value of the debt;
(b) each amount:
(i) that you have deducted or can deduct as a result of the *forgiveness of the debt; and
(ii) that is attributable to such a change.
245-55(3)
Paragraph (1)(a) does not apply to the debt if:
(a) either:
(i) the creditor was an Australian resident at the forgiveness time; or
(ii) the *forgiveness of the debt was a *CGT event involving a *CGT asset that was *taxable Australian property; and
(b) you and the creditor were not dealing with each other at *arm ' s length in respect of you incurring the debt; and
(c) the debt was not a *moneylending debt.
Note:
This subsection reduces your gross forgiven amount to reflect the reduction in the creditor ' s loss on the forgiven debt under the capital gains tax regime.
245-55(4)
This section has effect subject to sections 245-60 and 245-61 (about non-recourse and assigned debts).
Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited
CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.
The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.
