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TOFA - A new world of economic substance? paper


At its essence, TOFA attempts to systematically align the tax treatment of financial arrangements towards their economic substance rather than their legal form.

This paper examines:

  • how do the economic substance provisions work in practice?
  • when does the economic substance approach not apply in practice, i.e. what might be the limits of this economic substance approach?

Issues considered include:

  • economic substance under accounting principles
  • interactions with other parts of the Act that impose non-economic substance-based approaches
  • impact of tax character on substance-based analyses
  • deliberate design features in Div 230 that move away from economic substance
  • consideration of the synthetic disposal and non-disposal rules.

Author profile

Phillip Cole CTA
Phillip is Head of Tax, Australia and New Zealand at J.P.Morgan. He has spent nearly 20 years working in the internal tax functions at both Australian-based and foreign financial institutions, including eight years at the Commonwealth Bank of Australia. His experience covers the spectrum of tax issues affecting financial institutions with a particular focus on domestic banking issues, including extensive involvement in the TOFA reforms. Prior to corporate life, he spent seven years in chartered accounting. - Current at 13 February 2013
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This was presented at 2013 Financial Services Tax Conference .

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Individual sessions

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Author(s):  Richard J VANN

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Emerging regional issues (funds management)

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Australian Taxation Office audits, risk identification, dispute

Author(s):  Ashley KING,  Andrew MCLOUGHLIN

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GST and RITCs on trustee services

Author(s):  Amelia O'Rourke,  Bill PACKWOOD

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New R&D regime in financial services

Author(s):  Jamie MUNDY

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The promoter penalty regime - How the ATO ia applying it in practice

Author(s):  Bruce COLLINS,  Nathan FIRTH

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