On 1 October 2008, the Assistant Treasurer released another Exposure Draft Bill and Explanatory Material for the proposed regime for the taxation of financial arrangements (TOFA Stages 3 and 4).

We have already noted the long and difficult gestation of the project to reform the taxation of financial arrangements (‘TOFA’) – at least 15 years so far, and counting.  This Tax Brief examines two recent developments along the long road to TOFA:
• the announcement by the Assistant Treasurer of a firm start date; and
• recent work on the interaction between TOFA and the consolidation regime.

On 20 September 2007, the Government finally introduced into Parliament a Bill to enact the final stages of the proposed general regime for the taxation of financial arrangements (“TOFA”). As we have written on many occasions, TOFA has been a long and difficult project but after almost 16 years of work, we have now reached a major milestone – most of the previous Exposure Drafts of legislation circulated to taxpayers and the profession for comment have been superseded by a Bill presented to Parliament.

The Assistant Treasurer has released a second Exposure Draft of legislation for the taxation of financial arrangements.  The new version fills in some of the gaps evident in the last version and changes some of the policy and legislative detail.

Our Tax Brief of 24 January 2007 outlined the second Exposure Draft for the remaining stages of the taxation of financial arrangements (“TOFA”) reforms.  In late May, Treasury released two further pieces of the TOFA jigsaw.

On 3 January 2007, the Assistant Treasurer released a second Exposure Draft and Explanatory Memorandum (“2007 ED”) of the Taxation of Financial Arrangements (“TOFA”) legislation, generally referred to as “TOFA Stages 3 and 4.” The 2007 ED now addresses some of the issues raised during the extensive consultations that occurred in the year since the first Exposure Draft (“2005 ED”) was released in December 2005.

On Friday 16 December, the Government released the Exposure Draft and Explanatory Memorandum of additional provisions governing the taxation of financial arrangements, generally referred to in the industry as “TOFA Stages 3 and 4.”  This Tax Brief outlines the main impacts that the Exposure Draft legislation will have if it is enacted in something like its current form.

The morass that is TOFA – the Taxation of Financial Arrangements – continues its descent into farce.  The 13 year gestation of this collection of disparate measures has been prolonged even further by an announcement from the new Assistant Treasurer, Mr Mal Brough, on 5 August 2004.