Taxation of Financial Arrangements - Exposure Draft Legislation - January 2007

This consultation process has now been completed. Submissions available
Consultation Type
Draft Legislation

Key Documents

The Taxation of Financial Arrangements Stages 3 and 4 exposure draft legislation provide rules for taxation of gains and losses on financial arrangements to promote financial decision-making that is more neutral, that is, less distorted by tax considerations. The aim is for financial innovation and dealing in risk to be neither impeded (because of inappropriate tax treatment) nor inappropriately stimulated (because of unintended tax advantages). To the extent possible, the draft rules minimise compliance and administrative costs and mirror accounting treatment.

The exposure draft legislation defines 'financial arrangement' and sets out five tax-timing methods. These methods — fair value, accruals, retranslation, realisation and hedging (including character hedging) — determine the tax‑timing treatments of all financial arrangements covered by the proposed legislation.

This consultation forms part of the Taxation of Financial Arrangements (TOFA) initiative.