ATO’s new view in TD 2019/D9

The ATO released a document in October 2019, explaining its new stance on when forgiveness of a debt can be considered because of "natural love and affection." They now say that for this exception to apply, the creditor must be an individual person, not a company or organization.

They emphasize that the forgiveness should directly relate to feelings of love and affection, and these feelings must be a result of normal human interaction. In simpler terms, if a debt is forgiven because of love and affection, it must be the creditor who feels this love and affection.

Determining whether a debt was forgiven out of natural love and affection involves looking at the reasons behind the forgiveness and the relationship between the parties. The ATO highlights three key elements:

1. The debt must be forgiven.
2. There must be a clear connection between the forgiveness and the love and affection.
3. The love and affection must be a genuine, heartfelt emotion, not just a legal requirement.

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