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Depreciating assets and taxation of financial arrangements

Last updated 26 June 2012

The key provisions of the TOFA rules are found in Division 230 of the Income Tax Assessment Act 1997.

When do the TOFA rules start to apply to you?

If the TOFA rules apply to you, they will apply to the financial arrangements that you start to have from the beginning of your income year commencing on or after 1 July 2010 (unless you elected for the rules to apply a year earlier).

Do the TOFA rules apply to you?

The TOFA rules will apply to you if you are:

  • an authorised deposit-taking institution, securitisation vehicle or financial sector entity with an aggregated annual turnover of $20 million or more
  • a superannuation entity, approved deposit fund, pooled superannuation fund, managed investment scheme or entity with a similar status under foreign law relating to foreign regulation, with assets of $100 million or more
  • any other entity (other than an individual) 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.

If you do not meet these requirements you can elect to have the TOFA rules apply to you.

Regardless of whether the TOFA rules would otherwise apply to you, they apply to all qualifying securities, acquired during or after the first income year starting on 1 July 2010, that have a remaining life of more than 12 months after you start to have them.

TOFA rules and UCA

The TOFA rules contain interaction provisions which may modify the cost and termination value of a depreciating asset acquired by an entity to which the TOFA rules apply. This will be the case where payment (or a substantial proportion of the payment) is deferred for more than 12 months after delivery of the depreciating asset.



You also show the gains or losses from relevant hedging financial arrangements on the Capital allowances schedule 2011(NAT 3424).

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