In times of financial hardship, we are more frequently seeing the need for debts to be written off and consideration being given to the options for addressing these from a taxation perspective.

A borrower can be released from their obligations under a debt through the lender electing to write off or remit the debt or through the operation of law. This will ordinarily give rise to taxable debt remission income under the financial arrangement rules.

Alternatively, a debt write off may either trigger a dividend or there may be no tax consequences if undertaken in the right way.

This course will consider the tax implications of writing-off debts including:

• When the financial arrangement debt remission rules do and don’t apply
• The application of the self-remission rules for LTCs and partnerships
• The economic group remission rules
• The requirement to undertake a base price adjustment
• The availability of deductions for the lender

Upon satisfactory completion of this course, you will be able to:

• Understand the application of the debt remission rules
• Work through how the relief rules may be applied
• Assist parties to a debt/ financial arrangement to plan for debt remission so as to minimise unintended and unnecessary taxation consequences.

This course will be suited to:

People who are involved in assisting clients with debt levels including intermediate level accounts and senior accountants and any lawyers providing advice in this area particularly given current financial pressures.

Total CPD Hours: 1.00 (50 mins content + 10 mins Q&A)

PRESENTER:

Nola Crafar, Senior Manager Findex/Crowe
Nola is the senior manager for Findex in Dunedin tax team. She has been with Findex for over 15 years where she advises on a wide range of tax matters including trust disclosures, trust distributions and classification, relationship property considerations, and debt remission/capitalisation implications. She also assists other advisory firms and manages Inland Revenue Department queries.