16 Sep 1111 NTLG Finance and Investment TOFA Working Group
Tony Frost FTIA (Greenwoods & Freehills) attended the NTLG Finance & Investment TOFA Working Group meeting on 6 September 2011.
Highlights of the meeting included:
- Financial reports that do not satisfy all accounting disclosure requirements (TOFA Issue 607): this issue relates to the ability of some entities to meet the financial accounting requirements of the TOFA elective methodologies, where they adopt AASB 1053 reduced disclosure rules. An AASB representative joined this part of the meeting. The ATO’s preliminary view is that the reduced disclosure should not prevent use of the TOFA elective methodologies, however further review/report back by the ATO is in train.
- Draft ruling on scope of an “arrangement” (TR2011/D4): Initial discussions took place on this important draft ruling. Comments are due by 7 October 2011.
- Treasury update: Treasury advised that a number of TOFA amendments, as previously announced, are in train. Priority is being given to amendments dealing with PAYGI, accruals and realisation rules. A discussion paper addressing proposed amendments to the TOFA hedging rules, to be discussed in consultation on a confidential basis, is still being developed by Treasury. Treasury is also still considering possible amendments as regards the section 974-80 debt-equity integrity measure, and is paying close attention to the effect of the provision on entities with stapled structures.
- Whether put options are covered by s.230-45: a private sector member has raised the point that s.230-50(2) applies to call options over equities, and has asked whether it is the case (and whether it is intended) that unless a put option over an equity falls within s.230-45(1), that put options over equities be excluded from TOFA. The ATO undertook to consider the issue and advise their view in due course.
- The interaction between s.230-50 and s.230-530 for convertible redeemable preference shares: a private sector member has raised the issue that where a taxpayer holds or has issued convertible redeemable preference shares that are debt interests, it is not clear as to whether s.230-530(2) or s.230-50(2) takes precedence. The ATO undertook to consider the issue and advise their view in due course.
- Timing of deductibility of dividends: if/where the shares are financial arrangements subject to TOFA: this matter is being considered by the ATO.
- Securitisation: the ATO has released its long awaited technical discussion paper on the impact of TOFA on securitisation transactions. The ATO will be holding a consultation meeting on 21 September with members of the Securitisation Working Group to discuss feedback on the paper. The group will also discuss how the overall resolution of issues considered in the paper will be achieved. If members have any feedback on the paper, please contact us.
Members are reminded that they can find the current and finalised issues lists from the TOFA Working Group on the ATO website.