Commercial Debt Forgiveness

Go through the steps required to calculate the “net forgiven amount” (NFA) for debt forgiveness, as well as exclusions and reductions, with plenty of examples throughout.

In this session, we cover:

• Interaction with Division 7A

• Only applies to commercial debts?

  • What is ‘debt’?

• When does debt forgiveness arise?

  • Forms of forgiveness

  • Statute of limitations

  • Debt parking

  • Debt for equity

  • In-substance forgiveness

• Exclusions from CDF rules

• How to calculate the Net Forgiven Amount (NFA)

• Rules for reducing the NFA

  • Which tax attributes?

  • Tax and capital losses

  • Deductible expenses

  • CGT assets

  • Application to partnerships

• Pitfalls and planning strategies

• Key takeaways

Date recorded: 29 January 2025