Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 2/6)
Character Range: 4153096–4155740

if each entity had a *gross forgiven amount worked out using the formula:

Subdivision 245‑D—Calculation of net forgiven amount of a debt

Guide to Subdivision 245‑D

245‑80  What this Subdivision is about

      The net forgiven amount of a debt is worked out by subtracting, from the gross forgiven amount of the debt, any amount that this Act already takes into account for the debtor because the debt was forgiven (for example, if some part of the forgiven amount is treated as the debtor's ordinary income).
      If the debtor and creditor were companies under common ownership, they may agree to transfer some of the net forgiven amount from the debtor to the creditor. The creditor must apply that amount to reduce the capital loss or deduction it has because of the forgiveness.

Table of sections

Operative provisions
245‑85 Reduction of gross forgiven amount
245‑90 Agreement between companies under common ownership for creditor to forgo capital loss or deduction

Operative provisions

245‑85  Reduction of gross forgiven amount
 (1) The *gross forgiven amount of your debt is reduced by the sum of the following amounts:
 (a) any amount that, under a provision of this Act other than this Division, has been, or will be, included in your assessable income for any income year as a result of the *forgiveness of the debt;
 (b) any amount by which, under a provision of this Act other than this Division, an amount you could otherwise have deducted for any income year has been, or will be, reduced as a result of the forgiveness of the debt (except a reduction under Division 727 (about indirect value shifting));
 (c) any amount by which the *cost base of any of your *CGT assets has been, or will be, reduced under Part 3‑1 or 3‑3 as a result of the forgiveness of the debt.
Note: Paragraph (1)(c) does not cover a reduction under Division 727 (indirect value shifting) because that Division is not in Part 3‑1 or 3‑3.
 (2) Subject to section 245‑90, the amount remaining after reducing the *gross forgiven amount under subsection (1) is the net forgiven amount of the debt.

245‑90  Agreement between companies under common ownership for creditor to forgo capital loss or deduction
 (1) This section applies if:
 (a) a debt owed by a company to another company is *forgiven; and
 (b) from the time when the debt was incurred until the time when the debt is forgiven, the companies were *under common ownership.
 (2) If, apart from this subsection, the creditor would have made a *capital loss as a result of the *forgiveness of the debt:
 (a) the debtor and creditor may agree that the creditor is to forgo so much of the loss