The Government has released a draft of proposed amendments that will implement changes to the income tax law affecting consolidated groups. The amendments were announced on 25 November 2011 and relate to the operation of the consolidation tax cost setting rules and the operation of the taxation of financial arrangements (TOFA) rules for consolidated groups. The proposed amendments and explanatory material are on the Treasury website.
The proposed amendments to the consolidation tax cost setting rules seek to ensure that corporations inside consolidated groups do not receive tax benefits that corporations outside consolidated groups are unable to receive.
The proposed amendments to the TOFA consolidation interaction and TOFA transitional balancing adjustment provisions are designed to ensure that the tax treatment of financial arrangements that are part of the assets and liabilities in a consolidation/joining event is consistent with the TOFA tax timing rules.
These changes also address the technical issues raised by the industry as part of the post-enactment consultation on the TOFA stages 3 & 4 regime and ease the transition of consolidated groups into the regime. As previously announced, the changes will apply from the start of the TOFA 3 & 4 regime.
COMMENTS are due by 2 May 2012.
Source: Assistant Treasurer’s press release No 017, 18 April 2012
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