TOFA label changes
CA2016- 039
Presented by
David Truong
Technical Leader - Technical Leadership Group
Australian Taxation Office
10 September 2015
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
TOFA label changes (CA2016-039)
Status Dashboard
Implementation date - 1 July 2016
Likelihood - Definite
Current stage - Detailed design
Estimate of SwD impact- Medium.
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
TOFA label changes (CA2016-039)
Background
• Division 230 was inserted into the Income Tax Assessment Act (ITAA) 1997 and provided new
rules for the Taxation of Financial Arrangements (TOFA).
• TOFA ordinarily applies to TOFA taxpayers from their income year starting on or after 1 July 2010
(2011 income tax returns) and a number of TOFA tax return labels were inserted into various entity
income tax returns at that time.
• TOFA transitional balancing adjustment labels - Taxpayers that made an transitional election to
bring in their existing financial arrangements had to calculate a balancing adjustment (an
assessable income or allowable deduction amount) in respect of their existing financial
arrangements that was spread evenly over the first applicable TOFA income year and the next 3
income years. The election has passed and the these labels will be redundant starting from the
2016 income year.
• Are you a TOFA taxpayer? labels – These labels were used to identify who was a TOFA taxpayer
but is no longer required. We can identify TOFA taxpayers by identifying those that return an
amount at the TOFA gain or TOFA loss labels in the relevant income tax return.
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
TOFA label changes (CA2016-039)
Overview of key details of the change.
Company tax return
Remove label 5M – Did you make a gain, loss or transitional balancing adjustment from a financial
arrangement subject to the TOFA rules?
Remove label 8R – TOFA Transitional balancing adjustment
Fund income tax return
Remove label 16G – Did you make a gain, loss or transitional balancing adjustment from a financial
arrangement subject to the TOFA rules?
Remove label 16J – TOFA Transitional balancing adjustment
Self managed superannuation fund (SMSF) annual return
Remove label 17G – Did you make a gain, loss or transitional balancing adjustment from a financial
arrangement subject to the TOFA rules?
Remove label 17J – TOFA Transitional balancing adjustment
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
TOFA label changes (CA2016-039)
Overview of key details of the change.
Partnership tax return
Remove label 31L – Did you make a gain, loss or transitional balancing adjustment from a financial
arrangement subject to the TOFA rules?
Remove label 31O – TOFA Transitional balancing adjustment
Trust tax return
Remove label 31L – Did you make a gain, loss or transitional balancing adjustment from a financial
arrangement subject to the TOFA rules?
Remove label 31O – TOFA Transitional balancing adjustment
The instructional products for the impacted returns will also be amended to reflect the removal of the
labels identified above.
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
TOFA label changes (CA2016-039)
Overview of key details of the change.
Pay as you go Instalments
ATO systems will be updated such that they recognise whether a taxpayer is a TOFA taxpayer in an
income year by whether they record an amount at either the Total TOFA gains and/or the Total TOFA
losses labels in each of the relevant tax returns, or whether they have been identified as a TOFA
taxpayer in a previous income year.
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
Feedback and questions
The ATO would like Software developers to:
X: Update their software to reflect the removal of the relevant TOFA tax return labels by 1 July 2016
Y: Provide feedback on any challenges
What would Software Developers need the ATO to do?
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
Any further question
Please contact SIPO at:
[email protected]
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UNCLASSIFIED - ATO SwD Event- Services for Tax practitioners
Thank you