Published on 13 Feb 13
by NATIONAL DIVISION, THE TAX INSTITUTE
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.
Phillip is an Executive Manager in the Group Taxation team at Commonwealth Bank of Australia. He has 15 years experience working within the internal tax functions of financial institutions. His experience covers the spectrum of tax issues affecting financial institutions with a particular focus on domestic issues, including retail, leasing, corporate and financial markets issues. Prior to corporate life, he spent seven years in chartered accounting.
Current at 17 December 2007
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