| Commentary

140 Target company as creditor

| Commentary


140 Target company as creditor

Where the target company has loaned money to, or is otherwise owed money by, one of the sellers or, where the seller is a company, other companies in the seller’s group, there are three basic methods of dealing with the indebtedness:

  1. 140.1

        waiver or release;

  2. 140.2

        repayment; or

  3. 140.3

        permitting the indebtedness to remain outstanding.

These methods of maintaining and reorganising inter-company indebtedness may be used singly or in any combination.

Waiver or release of the indebtedness due to the target company will have taxation consequences1. In addition, waiver or release may constitute

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