15 Jan 2007 TOFA - Revised Exposure Draft Legislation and Explanatory MaterialIn a press release issued on 3 January2007, the Minister for Revenue and Assistant Treasurer, Peter Dutton, announced the release of the revised exposure draft legislation and explanatory material containing proposals for the tax treatment of financial arrangements (TOFA). These proposals, which represent the final stages (Stages 3 and 4) of reforms of the taxation of financial arrangements, will introduce new tax timing rules - fair value, retranslation and hedging - and will modernise the accruals and realisation rules as they apply to financial arrangements.
Mr Dutton said, "The revised exposure draft legislation has been developed following extensive industry consultation on the first exposure draft which was released in December 2005."
Mr Dutton said that, in line with industry submissions, the revised exposure draft incorporates a number of significant changes. These include an amended approach to determining the scope of financial arrangements and additional hedging rules that will facilitate a high level of matching between the tax treatment of the gain or loss on a hedging arrangement and the tax treatment of the gain or loss on the underlying transaction. Mr Dutton said that the additional hedging rules will have substantial benefits for industry in terms of improved risk management and lower business costs.
Mr Dutton indicated that the TOFA Stages 3 and 4 reforms will contain rules to address the tax treatment of synthetic financial arrangements. The Treasury will also consider the need for additional integrity rules over coming months. The proposed synthetic rules and any additional integrity rules which may be required will be subject to consultation prior to the introduction into Parliament of a Bill containing the final proposals.
Interested parties are invited to submit comments on the revised exposure draft legislation, explanatory material and the paper on consequential amendments by 28 February 2007.
For a copy of the Minister's press release, No 2007/001, 3 January 2007, go here
For a copy of the exposure draft legislation, explanatory material and the paper on consequential amendments, go here