Document ID: chunk:federal_register_of_legislation:C2025C00029:section:1:p31
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 1 (pt 31/35)
Character Range: 4135771–4138356

such as bankruptcy.

Table of sections

Operative provisions
245‑35 What constitutes forgiveness of a debt
245‑36 What constitutes forgiveness of a debt if the debt is assigned
245‑37 What constitutes forgiveness of a debt if a subscription for shares enables payment of the debt
245‑40 Forgivenesses to which operative rules do not apply
245‑45 Application of operative rules if forgiveness involves an arrangement

Operative provisions

245‑35  What constitutes forgiveness of a debt
  A debt is forgiven if and when:
 (a) the debtor's obligation to pay the debt is released or waived, or is otherwise extinguished other than by repaying the debt in full; or
 (b) the period within which the creditor is entitled to sue for the recovery of the debt ends, because of the operation of a statute of limitations, without the debt having been paid.

245‑36  What constitutes forgiveness of a debt if the debt is assigned
  A debt is forgiven if and when the creditor assigns the right to receive payment of the debt to another entity (the new creditor) and the following conditions are met:
 (a) either the new creditor is the debtor's *associate or the assignment occurred under an *arrangement to which the new creditor and debtor were parties;
 (b) the right to receive payment of the debt was not acquired by the new creditor in the ordinary course of *trading on a market, exchange or other place on which, or facility by means of which, offers to sell, buy or exchange securities (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936) are made or accepted.
Note 1: Division 16E of Part III of the Income Tax Assessment Act 1936 brings to account gains and losses on some securities on an accruals basis.
Note 2: This Division also applies if an assigned debt is subsequently forgiven by the new creditor. Section 245‑61 tells you how to work out the value of the debt in that case.

245‑37  What constitutes forgiveness of a debt if a subscription for shares enables payment of the debt
  If an entity subscribes for *shares in a company to enable the company to make a payment in or towards discharge of a debt it owes to the entity, the debt is forgiven when, and to the extent that, the company applies any of the money subscribed in or towards payment of the debt.

245‑40  Forgivenesses to which operative rules do not apply
  Subdivisions 245‑C 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