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31 Taxation of financial arrangements (TOFA)

Last updated 11 February 2019

The TOFA rules apply to the following partnerships:

  • authorised deposit-taking institutions, securitisation vehicles and financial sector entities with an aggregated annual turnover of $20 million or more
  • managed investment schemes, or entities with a similar status under foreign law relating to corporate regulation with assets of $100 million or more
  • any other partnership which satisfies one or more of the following:
    • an aggregated turnover of $100 million or more
    • assets of $300 million or more
    • financial assets of $100 million or more.
     

Regardless of whether or not any of these thresholds are met, the TOFA rules will apply to all qualifying securities of all partnerships where they are acquired during an income year beginning on or after 1 July 2010 (or 1 July 2009 if the early start election was made) and that have a remaining life of more than 12 months after the partnership starts to have them.

The TOFA rules apply to all financial arrangements that the affected partnership starts to have during income years commencing on or after 1 July 2010. In addition, a partnership may have elected to have the TOFA rules apply to its financial arrangements for income years commencing on or after 1 July 2009. Partnerships are also able to make a transitional election to apply the TOFA rules to their existing financial arrangements - although the time for making this election has passed for most partnerships. Partnerships operating under the TOFA rules who lodge their income tax returns on the basis of a substituted accounting period will need to determine when the new rules will start for them.

Attention

The aggregated turnover tests may mean that the TOFA rules will apply to partnerships that do not meet the thresholds in their own right. Aggregated turnover includes the annual turnover of any entity a partnership is connected with, or any affiliate of the partnership (including overseas entities).

End of attention

L - Did you make a gain, loss or transitional balancing adjustment from a financial arrangement subject to the TOFA rules?

Print X in the appropriate box at L.

Print X in the Yes box only if during the 2010-11 income year the partnership:

  • made an assessable gain or deductible loss under the TOFA rules, or
  • had an assessable or deductible amount from a transitional balancing adjustment as a result of making the transitional election for existing financial arrangements.
Further Information

For more information, see Guide to the taxation of financial arrangements (TOFA) rules.

End of further information

M - Total TOFA gains

 

 

Show at M the partnership's total assessable TOFA gains from financial arrangements.

N - Total TOFA losses

 

 

Show at N the partnership's total deductible TOFA losses from financial arrangements.

O - TOFA transitional balancing adjustment

 

 

Show at O the partnership's transitional balancing adjustment amount for the income year as a result of making the transitional election for existing financial arrangements.

If the transitional balancing adjustment is a deductible amount, print L in the box at the right of O.

Attention

Working out the partnership's total assessable TOFA gains, deductible TOFA losses, and TOFA transitional balancing adjustment.

Ensure you take into account at M, N and O any amount for a TOFA financial arrangement that you have shown at labels such as:

  • S Net income or loss from business item 5
  • A, Z, S, B, R or T Partnerships and trusts item 8
  • GInterest deductions item 9
  • JGross interest item 11
  • KUnfranked dividend amount item 12
  • OOther Australian income item 14
  • QOther deductions item 18
  • BGross other assessable foreign source income item 23.

You should only take into account an amount once at one of M, N and O.

End of attention

P - TOFA gains from unrealised movements in the value of financial arrangements

Show at P the partnership's TOFA gains from unrealised movements in the value of financial arrangements. This may include TOFA gains shown at:

  • Other business income at G and H item 5
  • Other assessable foreign source income item 23.
 

QC24239