The Federal Government has released an exposure draft of amendments that will implement changes to income tax law affecting consolidated groups.

 

The amendments were announced by the then Assistant Treasurer on 25 November 2011. They 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.

 

"These amendments will help protect a significant amount of revenue that would otherwise be at risk by limiting the scope of amendments to the consolidation regime made in 2010," Assistant Secretary David Bradbury said.

 

The proposed amendments will ensure that, for consolidated groups, the TOFA stages 3 & 4 provisions operate as intended and that the tax treatment of financial arrangements that are liabilities is appropriate.

 

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.

 

The draft Tax Laws Amendment (2012 Measures No. 2) Bill: Consolidation and explanatory material can be found on the Treasury website.

 

Submissions on the exposure draft legislation close on 2 May 2012.