Finance and tax

Taxation of financial arrangements deductions

Losses and deductions from financial arrangements calculated under the TOFA accruals, realisation, fair-value, retranslation, hedging or financial-reports methods.

Reviewed 30 July 2026Income years 2025-26 and 2026-27

Who can claim

This deduction is available to individuals and companies.

  • The TOFA rules apply to the taxpayer or an election brings the financial arrangement within TOFA.
  • The selected statutory method produces a deductible loss or expense for the income year.

What you cannot claim

  • Do not claim the same financing loss under both TOFA and another interest, forex or investment rule.
  • Excluded short-term, private and other specifically excluded arrangements do not use this calculation.

How the amount is worked out

Calculate the gain or loss under the applicable TOFA method, including accrual, realisation, retranslation, fair-value, hedging and transitional adjustments.

Records the ATO expects

  • Financial arrangement register
  • TOFA elections
  • Method calculation
  • Accounting and tax reconciliation

Where this rule comes from

Primary source: Income Tax Assessment Act 1997 section 230-15 (Section 230-15 TOFA gains and losses). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.

Next steps