Section EW 44 — Income Tax Act 2007: Consideration when debt forgiven for natural love and affection

EW 44 Consideration when debt forgiven for natural love and affection When this section applies: first case (1) This section applies when— (a) a person is a debtor; and (b) the creditor is a natural person; and (c) the creditor forgives the debtor’s debt because of the natural love and affection the creditor has for the debtor. When this section applies: second case (2) This section also applies when— (a) a trust is a debtor; and (b) the trust was established mainly to benefit 1 or both of the following: (i) a natural person for whom the creditor has natural love and affection: (ii) an organisation or a trust whose income is exempt under section CW 41 (Charities: non-business income) or CW 42 (Charities: business income); and (c) the creditor is a natural person; and (d) the creditor forgives the debtor’s debt. Two points about subsections (1) and (2) (3) For the purposes of subsections (1) and (2),— (a) the debtor’s debt includes an amount accrued and unpaid at the time of the forgiveness; and (b) the means by which the debt is forgiven, whether in a will or otherwise, is immaterial. Consideration (4) The debtor is treated as having paid the debt on the date on which the creditor forgives it. Defined in this Act: amount , consideration , income , pay , Compare: 2004 No 35 s EW 46