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FO 20: Calculation of outstanding accrued balance: amounts remitted
or “How to calculate the remaining balance when amounts are forgiven during a business merger”
You could also call this:

“Rules for settling financial agreements when related companies merge”

This section of the law applies when companies that are joining together (amalgamating) have a financial agreement with each other that exists on the day they join. It also applies when these companies are considered to be in the same economic group, with one company being the lender and the other being the borrower.

When this happens, the law treats the situation in a special way. It considers that the borrower has paid back the full amount of the financial agreement on the day the companies join together. At the same time, it treats the lender as if they have received the full payment for the financial agreement on that same day.

This rule helps to simplify things when companies in the same economic group join together, by treating their financial agreements as if they were settled on the day of joining.

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Next up: FZ 1: Treatment of interest payable under debentures issued before certain date

or “Tax rules for interest on certain company loans issued before October 1986”
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Part F Recharacterisation of certain transactions
Amalgamation of companies

FO 21When amalgamating companies are parties to financial arrangements: economic groups

  1. This section applies when—

  2. amalgamating companies are parties to a financial arrangement that exists on the date of the amalgamation; and
    1. section EW 46C(1)(a) or (b) (Consideration when debt remitted within economic group) applies to the amalgamating companies as creditor and debtor for the financial arrangement; and
      1. section EW 46C(3) does not apply.

        1. The debtor is treated as having paid the amount of the financial arrangement on the date of the amalgamation.

        2. The creditor is treated as having been paid the amount of the financial arrangement on the date of the amalgamation.

        Notes
        • Section FO 21: inserted, on , by section 117 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
        • Section FO 21(1)(b): amended (with effect on 1 April 2008), on , by section 110 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).