Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:2_2:p5
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 2 cl 2 (pt 5/7)
Character Range: 87502–90042

working out the value of a previously assigned debt

Working out if an amount is offset against the value of the debt

245‑65 Amount offset against amount of debt

Working out the gross forgiven amount

245‑75 Gross forgiven amount of a debt
245‑77 Gross forgiven amount shared between debtors

Working out the value of a debt

245‑50  Extent of forgiveness if consideration is given

  If any consideration is paid or given in respect of the *forgiveness of a debt, the debt that is forgiven is:
 (a) the obligation that existed before the forgiveness to pay so much of the debt as is expressed, or is taken, to be forgiven; and
 (b) the obligation that existed before the forgiveness to pay any part of the debt to which paragraph (a) does not apply but which ceases to be payable as a result of the payment or giving of the consideration.

Example: Daniel owes Samara $100. Samara agrees to accept $60 in full payment of the debt.

 If their agreement specifies that Samara forgives the whole debt in return for $60, paragraph (a) provides that the forgiven debt is $100.

 If their agreement instead requires Daniel to repay $60 and specifies that Samara forgives the remaining $40, paragraph (a) would deal with the $40 and paragraph (b) would add the remaining $60, again producing a forgiven amount of $100.

 In either case, the $60 Daniel pays is offset against the forgiven amount of $100 in working out the gross forgiven amount of the debt: see sections 245‑65 and 245‑75.

245‑55  General rule for working out the value of a debt

 (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.

 (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