On 4 December 2008 the Assistant Treasurer introduced into
Parliament the Tax Laws Amendment (Taxation of Financial
Arrangements) Bill 2008, containing the legislation for stages 3
and 4 of TOFA. The 2008 Bill replaces a Bill introduced in 2007,
which lapsed upon the proroguing of Parliament for the 2007 Federal
election.
The rules are intended to align the accounting and taxation
treatments of complex financial transactions and are welcomed.
Closer accounting and taxation rules should reduce compliance costs
but may result in income being recognised earlier for tax
purposes.
The main provisions are contained in the new Division 230 of the
Income Tax Assessment Act, 1997. Amendments have been made to the
original 2007 Bill to address the interaction with the
consolidation rules and specific integrity measures. These were
foreshadowed by the previous government and are included in the new
Bill following consultation with relevant stakeholders over the
last year.
