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JohnnyLawrence(Newbie)Newbie
2 Mar 2024

I have two trading companies (all shares in both companies held by my Investment company). In 2021, Trading company A sold $150k of stock to Trading company B, there was also a marketing fee of $10k charged from Company A to company B, but no cash moved between the two trading entities, so I have a loan on the balance sheet of both companies.


Fast forward to 2024, Company B has gone belly-up, so I need to forgive the loan to get rid of the loan on the balance sheet of Company A. What is the income tax impact for company A in forgiving the loan and Company B in receiving the loan forgiveness?


Cheers,


Johnny

4,126 views
1 replies
4,126 views
1 replies

Most helpful response

Most helpful reply

Deb_ATO(Community Support)Community Support
8 Mar 2024

Hi @JohnnyLawrence


The receiver would normally report a gain in their return and the giver a loss.

Check out some very helpful info on another one of our similar threads, this'll help get you on the right track.

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Tax Treatment of Loan Forgiveness | ATO Community