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Guide to taxation of financial arrangements (TOFA)

Guide to the taxation of financial arrangements (TOFA) rules.

Last updated 15 June 2023

The stages that taxation of financial arrangements (TOFA) rules were introduced and what TFA means.

The ad hoc manner in which TOFA amendments were made in the past.

The TOFA reforms were implemented in stages, each stage having a particular purpose and addressing particular concerns.

The principles-based framework for the taxation of gains and losses from financial arrangements.

The entities that are subject to TOFA on a mandatory basis and making an election to have TOFA apply.

How early-start elections and existing financial arrangements elections work.

How to identify the arrangement being tested so you can determine whether an arrangement is a financial arrangement.

Calculating gains or losses and tax-timing methods.

Elective tax-timing methods that can be applied to work out when an entity makes a gain or a loss.

If eligible, the elective tax-timing methods.

When an entity must make a balancing adjustment, the exceptions and applying a method statement.

The 6 categories of consequential and interaction amendments.

The integrity rules around consistency, non-arm's length, arm's length and value shifting.

Methodology for calculating instalment income for pay as you go instalment (PAYGI) purposes.

The requirement to report TOFA income in your tax return.

The record you need in place under the hedging financial arrangement method.