Document Type : Conceptual Paper

Authors

1 Department of Accounting and Finance, The University of Fiji, Lautoka, Fiji

2 Department of Accounting & Finance, The University of Fiji, Saweni, Lautoka, Fiji

Abstract

An uncollected tax is a debt to the state. In Fiji, individuals’ pay income tax if they earn more than FJD$30,000 under the Income Tax Act 2015 (ITA). Thus, the purpose of this paper is to critically evaluate the stand of debt forgiveness by the lender to the borrower in the Fiji Income Tax Act 2015. Furthermore, the paper has discussed the Islamic viewpoint of debt that is forgiven. The findings indicated that Fiji looks upon the forgiven debts as income in the hand of the borrower and thus is taxed whereas the Islamic view is that such taxes should not be imposed taking into account the verse of the Quran (2:280).

Keywords

Australian Taxation Office (2018). Home page. [Online] Ato.gov.au. Available at: https://www.ato.gov.au/[Accessed 12 Oct. 2018].
Bingham, J. (1949). Debt Cancellation - Gift or Income 10 Alabama Lawyer 1949. [Online] Heinonline.org. Available at: https://heinonline.org/HOL/LandingPage? handle=hein.barjournals/alwyr0010&div=8&id=&page= [Accessed 12 Oct. 2018].
Bittker, B. and Thompson, B. (1978). Income from the Discharge of Indebtedness: The Progeny of United States v. Kirby Lumber Co. California Law Review, 66(6), p.1159.
Braithwaite, V. (2002). Taxing democracy. England: Ashgate Publishing Ltd.
Burman, L.E. and Ricoy, P.D. (1997). Capital gains and the people who realize them. National Tax Journal, 50(3), pp. 427-451.
CPA, (2018). Commercial Debt Forgiveness Client Letter. [Online] Available at: https://www.cpaaustralia.com.au/.../corporate/.../commercial_debt_forgiveness_client_...[Accessed 12 Oct. 2018].
Fiji Revenue & Customs Service. (2018). [Online] Available at: http://www.fiji.gov.fj/ getattachment/66423951-45b6-4484-b66d-0a2b63a03a9a/Bill-40---FRCS-(Amendment)-(No-2).aspx[Accessed 19 Sep. 2018].
Fiji Revenue & Customs Service. (2018). Income Tax Act of 2015.
Fiji Revenue & Customs Service. (2018). Tax Administration Act of 2009.
Harvey, C. (2018). Debt forgiveness. [Online] TheFreeDictionary.com. Available at: https://financial-dictionary.thefreedictionary.com/Debt+forgiveness[Accessed 12 Oct. 2018].
Heinonline.org. (2018). The Debt Release: Gift or Increase in Net Worth 4 Utah Law Review 1954-1955. [Online] Available at: https://heinonline.org/HOL/Landing Page?handle=hein.journals/utahlr4&div=8&id=&page= [Accessed 12 Oct. 2018].
Islam Question and Answer. (n.d). Seriousness of Debt [Online]. Available at: https://islamqa.info/en/answers/71183/seriousness-of-debt [Accessed 22 May 2019].
Islam Question and Answer. (n.d). The difference between zakaah and taxes, and the conditions of imposing taxes [Online]. Available at: https://islamqa.info/en/answers /130920/the-difference-between-zakaah-and-taxes-and-the-conditions-of-imposing-taxes [Accessed 22 May 2019].
Surrey, S. (1940). The Revenue Act of 1939 and the Income Tax Treatment of Cancellation of Indebtedness. The Yale Law Journal, 49(7), p.1153.
Vickery, R. and Flood, M. (2011). Australian business law. Pearson Education Australia.
Wright, L. (1951). Realization of Income through Cancellations, Modifications, and Bargain Purchases of Indebtedness: II. Michigan Law Review, 49(5), p.667.