Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:2_6:p3
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 2 cl 6 (pt 3/6)
Character Range: 102115–104770

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 as is stated in the agreement and does not exceed the amount that would be the net forgiven amount of the debt apart from this section (the provisional net forgiven amount of the debt); and
 (b) if such an agreement is made:
 (i) the creditor's capital loss is reduced by the agreed amount; and
 (ii) the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
 (iii) the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the net forgiven amount of the debt.

 (3) If, apart from this subsection, the creditor could deduct an amount in respect of the debt under section 8‑1 (about general deductions) or section 25‑35 (about bad debts) for the *forgiveness income year:
 (a) the debtor and creditor may agree that the creditor is to forgo so much of the deduction as is stated in the agreement and does not exceed the amount that would be the net forgiven amount of the debt apart from this section (the provisional net forgiven amount of the debt); and
 (b) if such an agreement is made:
 (i) the amount the creditor can deduct is reduced by the agreed amount; and
 (ii) the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
 (iii) the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the net forgiven amount of the debt.

 (4) Neither subsection (2) nor (3) applies in relation to an agreement unless the agreement:
 (a) is in writing and signed by the public officer of each company; and
 (b) is made before:
 (i) the first of those companies lodges its *income tax return for the *forgiveness income year; or
 (ii) any later day that the Commissioner determines in writing.

 (5) A determination made under subparagraph (4)(b)(ii) is not a legislative instrument.

Subdivision 245‑E—Application of net forgiven amounts

Guide to Subdivision 245‑E

245‑95  What this Subdivision is about

      The total of the net forgiven amounts of all your debts forgiven in an income year is applied to reduce 4 classes of amounts that could otherwise reduce your taxable income in the same or a later income year. It is applied in the following order:

                (a) to your tax losses from previous income years;
                (b) to your net capital losses from previous income years;
                (c) to the deductions you would otherwise