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Debt Forgiveness for Trusts

Published on 29 Apr 2004 | Took place at Leonda by the Yarra, Hawthorn, VIC

The laws replacing Section 109UB have extended Division 7A to loans forgiven by trusts. The extension of Division 7A to loans forgiven by trusts supplements other tax laws relating to the forgiveness of debts, making for an increasingly complicated web of rules. As a result, all tax practitioners need to be much more careful about dealing with trust debts and loan accounts.

Individual sessions

Debt Forgiveness for Trusts

Author(s):  Arthur ATHANASIOU This seminar paper considers the following:
- whether a dormant loan account is a problem
- the risks of assigning and offsetting loan accounts
- how the mere writing off of a loan account could be a deemed dividend
- whether a beneficiary can forgive a trust loan account in the beneficiary's Will
- whether the release of an unpaid trust entitlement is caught by the debt forgiveness rules
- the tax risks for a trust creditor if a debt goes bad.

Materials from this session: