22 December 2017

Taxation of Financial Arrangements reform

Simplification of the Taxation of Financial Arrangements (TOFA) rules was announced in the 2016-17 Budget. The TOFA rules set out the amount and timing of gains and losses on financing transactions for tax purposes. These changes are an important regulatory reform, which would deliver significant compliance cost savings and greater certainty for taxpayers.

The amended rules were announced to apply to income years commencing on or after 1 January 2018.

Legislation implementing this proposal has yet to be released, reflecting the Government’s extensive legislative program.

Simplification of the TOFA rules is a highly complex task, and it is important to take the time to ensure that any changes are carefully considered to prevent any unintended outcomes, and to ensure the expected compliance costs savings are realised.

The Government will defer the commencement of changes to the TOFA regime and the changes will now commence from income years that begin after Royal Assent.

Treasury will continue to engage with stakeholders in the design of the amended rules, and to identify specific aspects of TOFA reform that could be prioritised. For further information, contact Treasury on (02) 6263 3207 or by email to financialservicestax@treasury.gov.au.