With most of the pieces of the Taxation of Financial Arrangements (TOFA) jigsaw on the table, it is now a matter of making sure it all fits together. On 20 April 2010, the Assistant Treasurer released a number of proposed refinements to the TOFA puzzle, contained in an exposure draft (ED) and accompanying draft explanatory memorandum (EM).

The new taxation of financial arrangements (TOFA) regime cannot be left in the too-hard/not relevant basket for much longer. Affected taxpayers need to decide whether they should make any or all of the available elections that deal with the transition to TOFA. This decision has to be made relatively soon (by 15 January 2010 for taxpayers with a 30 June year end) and will require some careful consideration. This Tax Brief is a guide to these transition-to-TOFA elections.

The regime for taxing financial arrangements (‘TOFA’) was passed by Parliament earlier this year and is now accessible to taxpayers who wish to ‘go early’ – that is, before the mandatory start date of 1 July 2010.  TOFA can affect both the investments made in the managed funds sector and the financing of those investments, but just how – and how much – activity in the funds management sector will be affected is neither obvious nor straightforward.  This Tax Brief examines some of the issues that the TOFA regime will present for managed funds such as domestic and international cash and bond funds, share funds and property trusts.

The new Taxation of Financial Arrangements regime (‘TOFA’) will have significant effects for most large companies and trusts.  Those effects will not be limited just to transactions which involve the obvious financial instruments – the debt capital they raise and the cost of servicing it – TOFA can also have implications for the assets they acquire and the arrangements they put in place to manage risks associated with debt, equity, assets and liabilities.  In this Tax Brief, we look at some issues arising from how the TOFA rules will affect domestic and cross-border M&A activity.

The Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008, (‘Bill’) which contains the final stages of the taxation of financial arrangements (‘TOFA’) project, was introduced into Parliament on 4 December 2008.

After much delay, the regime for taxing financial arrangements (‘TOFA’) now seems likely to be passed early this year.  TOFA can affect both the investments made in the property sector and the financing of those investments, but just how – and how much – activity in the property sector will be affected is neither obvious nor straightforward.  This Tax Brief examines some of the issues that the TOFA regime will present for the property industry.

Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008 (the TOFA Bill), which contains the final stages of the taxation of financial arrangements (TOFA) reform project, was introduced into the House of Representatives by the Assistant Treasurer, the Hon Chris Bowen MP, on 4 December 2008 and has already been referred to the Senate Economics Committee for inquiry and report by 20 February 2009.

On 1 October 2008, the Assistant Treasurer released another Exposure Draft Bill and Explanatory Material for the proposed regime for the taxation of financial arrangements (TOFA Stages 3 and 4).

We have already noted the long and difficult gestation of the project to reform the taxation of financial arrangements (‘TOFA’) – at least 15 years so far, and counting.  This Tax Brief examines two recent developments along the long road to TOFA:
• the announcement by the Assistant Treasurer of a firm start date; and
• recent work on the interaction between TOFA and the consolidation regime.

On 20 September 2007, the Government finally introduced into Parliament a Bill to enact the final stages of the proposed general regime for the taxation of financial arrangements (“TOFA”). As we have written on many occasions, TOFA has been a long and difficult project but after almost 16 years of work, we have now reached a major milestone – most of the previous Exposure Drafts of legislation circulated to taxpayers and the profession for comment have been superseded by a Bill presented to Parliament.

The Assistant Treasurer has released a second Exposure Draft of legislation for the taxation of financial arrangements.  The new version fills in some of the gaps evident in the last version and changes some of the policy and legislative detail.

Our Tax Brief of 24 January 2007 outlined the second Exposure Draft for the remaining stages of the taxation of financial arrangements (“TOFA”) reforms.  In late May, Treasury released two further pieces of the TOFA jigsaw.

On 3 January 2007, the Assistant Treasurer released a second Exposure Draft and Explanatory Memorandum (“2007 ED”) of the Taxation of Financial Arrangements (“TOFA”) legislation, generally referred to as “TOFA Stages 3 and 4.” The 2007 ED now addresses some of the issues raised during the extensive consultations that occurred in the year since the first Exposure Draft (“2005 ED”) was released in December 2005.

On Friday 16 December, the Government released the Exposure Draft and Explanatory Memorandum of additional provisions governing the taxation of financial arrangements, generally referred to in the industry as “TOFA Stages 3 and 4.”  This Tax Brief outlines the main impacts that the Exposure Draft legislation will have if it is enacted in something like its current form.

The morass that is TOFA – the Taxation of Financial Arrangements – continues its descent into farce.  The 13 year gestation of this collection of disparate measures has been prolonged even further by an announcement from the new Assistant Treasurer, Mr Mal Brough, on 5 August 2004.