TOFA tax return labels

Entities are required to apply the taxation of financial arrangement (TOFA) rules if they meet certain asset and aggregated turnover thresholds or have chosen to use the TOFA rules.

The TOFA rules contained in Division 230 of the Income Tax Assessment Act 1997 (ITAA 1997) determine TOFA entities' tax treatment of gains and losses from financial arrangements.

TOFA taxpayers must complete the following specific TOFA labels:

  • Total TOFA gains
  • Total TOFA losses.

TOFA taxpayers must also include TOFA gains and losses that are assessable or deductible in an income year in the relevant income or expense labels.

This guide is based on the 2016 income tax returns.

Example: reporting TOFA gains and losses

Simon Ltd has the following gains and losses from its financial arrangements for the income year ended 30 June 2016:

  • term deposit entered into on 10 August 2014 - interest income - $205,000
  • loan entered into on 20 January 2015 - interest expense - $150,000
  • loan entered into on 1 July 2015 - interest expense - $320,000.

In completing its 2016 tax return, Simon Ltd should include the following:


Gross interest



Interest expenses within Australia



Total TOFA gains



Total TOFA losses


Where Total TOFA gains and Total TOFA losses are not completed correctly, an incorrect pay as you go (PAYG) instalment rate may be issued. The tax return instructions identify how to complete the TOFA labels correctly.

End of example
    Last modified: 10 Jun 2016QC 26779