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  • 31 Taxation of financial arrangements (TOFA)

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The TOFA rules apply to the following trusts:

    • 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 trust 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 qualifying securities acquired during income years commencing on or after 1 July 2010 (or 1 July 2009 if the early start election was made) and have a remaining life of more than 12 months after the trust starts to have them.

    The TOFA rules apply to all financial arrangements that the affected trust starts to have during income years commencing on or after 1 July 2010. In addition, a trust may have elected to have the TOFA rules apply to its financial arrangements for income years commencing on or after 1 July 2009. Trusts 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 trusts. Trusts operating under the TOFA rules who lodge their 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 trusts that do not meet the thresholds in their own right. Aggregated turnover includes the annual turnover of any entity a trust is connected with, or any affiliate of the trust (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 trust:

    • made an assessable gain or deductible for 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 at www.ato.gov.au/tofa

    End of further information

    M Total TOFA gains

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

    N Total TOFA losses

    • Show at N the trust's total deductible for TOFA losses from financial arrangements.

    O TOFA transitional balancing adjustment

    Show at O the trust'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 next to O.

    Attention

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

    Ensure you take into account at M, N and O any amount in relation to a TOFA financial arrangement that you have shown at entries 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 trust'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.
    Last modified: 12 Feb 2019QC 24223