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Election for the TOFA rules to apply

Explains what the election for the TOFA rules to apply is, and how to make this election.

Last updated 2 February 2016

What is this election?

The TOFA rules apply to you if one or more of the following applies:

  • you meet certain thresholds
  • you hold certain qualifying securities.

If you do not meet the thresholds, you can make the election to have the TOFA rules apply.

Will you meet the thresholds in the year you come into existence?

If you are a new entity, you may wish to have the TOFA rules apply to financial arrangements you start to have in the year you come into existence and later income years. This will happen automatically if you satisfy the thresholds in the income year you come into existence - however, you must wait until the end of that income year to work out if you satisfy the thresholds.

If you want to ensure the TOFA rules apply to financial arrangements you start to have in that income year and later income years, you can make this election during that income year. This will mean that even if you don't meet the thresholds at the end of that income year, the TOFA rules will still apply.

Example 1

ABC Co is incorporated during the 2013 income year and starts to derive income during this year.

ABC Co forecasts that for the 2013 income year it will meet one of the thresholds, being an aggregated turnover of $100 million or more - however, later, towards the end of the 2013 income year, ABC Co is unsure whether this will be the case.

ABC Co wants to have the TOFA rules apply to the financial arrangements it started to have in the 2013 income year. To ensure this happens, even if they don't have an aggregated turnover of $100 million or more, they can make an election for the TOFA rules to apply before the end of the 2013 income year.

End of example

How do you make this election?

You can download and complete the TOFA 3 & 4 election for Division 230 to apply form (NAT 73325).

You do not have to notify us of this election, but you should keep a copy of it with your tax records.

You can make this election at any time - however, the time at which you make it will affect which of your financial arrangements will be subject to the TOFA rules.

If you make the election for the TOFA rules to apply, then the TOFA rules apply to financial arrangements you start to have:

  • during the income year in which you make the election
  • in later income years.

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