Depreciating assets and taxation of financial arrangements (TOFA)

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.

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.

For more information, see:

Last modified: 26 May 2016QC 48118