Document ID: chunk:federal_register_of_legislation:C2025C00029:section:1:p32
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 1 (pt 32/35)
Character Range: 4138157–4140834

to 245‑G do not apply to a *forgiveness of a debt if:
 (a) the debt is waived and the waiver constitutes a *fringe benefit; or
Note: The waiver by an employer of a debt owed by an employee is usually a fringe benefit: see section 14 of the Fringe Benefits Tax Assessment Act 1986.
 (b) the amount of the debt has been, or will be, included in the assessable income of the debtor in any income year; or
 (c) the forgiveness is effected under an Act relating to bankruptcy; or
 (d) the forgiveness is effected by will; or
 (e) the forgiveness is for reasons of natural love and affection; or
 (f) the debt is a *tax‑related liability or a civil penalty under Division 290 in Schedule 1 to the Taxation Administration Act 1953 (about penalties for promoters and implementers of tax avoidance schemes).
Note: If the forgiveness of your debt involved an arrangement which was entered into before 28 June 1996, see section 245‑10 of the Income Tax (Transitional Provisions) Act 1997.

245‑45  Application of operative rules if forgiveness involves an arrangement
 (1) If:
 (a) the debtor and the creditor in relation to a debt enter into an *arrangement; and
 (b) under the arrangement, the debtor's obligation to pay the debt is to cease at a particular future time; and
 (c) the cessation of the obligation is to occur without the debtor incurring any financial or other obligation (other than an obligation that, having regard to the debtor's circumstances, is of a nominal or insignificant amount or kind);
Subdivisions 245‑C to 245‑G apply as if the debt were *forgiven when the arrangement is entered into.
 (2) If, after the arrangement is entered into, the debt is forgiven, the later forgiveness is disregarded for the purposes of those Subdivisions.

Subdivision 245‑C—Calculation of gross forgiven amount of a debt

Guide to Subdivision 245‑C

245‑48  What this Subdivision is about
      The 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