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.

If you have any questions, feel free to contact Tax Ideas Accountants & Advisers

at +61 2 83181545. You can also book an appointment through our live calendar.

Managing Joint Ventures in Property Development

When participants in a joint venture (JV) are involved in property development, they may encounter challenges regarding the treatment of the land as trading stock. This can impact deductions for development expenses and potentially lead to a gain for the original landowner before the land is sold.

In an unincorporated joint venture (JV), there's no separate tax return for the JV itself. Instead, each participant files their own tax return, including their share of expenses and income. They're taxed individually on any profits they make from selling their share of the JV's output. This setup is different from partnerships, where all partners are taxed together.