Most readers have already coped with major tax change management before, and will no doubt draw upon the insights obtained from such projects in gearing up for the TOFA implementation challenge.
Nonetheless, managing the change to TOFA will be a unique experience: a mix of tax and accounting issues, possible changes to reporting systems, a review of information linkages between tax and treasury functions, and (most importantly) identifying the "bottom-line” impact on reported profits, deferred tax balances and tax payments.
Whilst appreciating that the circumstances of clients and industry issues differ, our view here at PricewaterhouseCoopers is that the new TOFA rules need to be approached from both a strategic and operational perspective.
From a strategic perspective, the impact of the new rules on the future viability of key transactions needs to be considered. In addition, the availability of alternative possible outcomes and new arrangements which might be available going forward need to be identified and assessed.
From an operational perspective, taxpayers need to evaluate the timing and impact of transition into the new rules, together with necessary internal process management (such as the formation of relevant project teams and management of key organisational stakeholders).
PricewaterhouseCoopers has developed a phased methodology to respond to the introduction of TOFA.
The essence of our approach is to identify a client’s objectives in relation to TOFA (for example, simplicity, tax equal to accounts, flexibility) and, associated with this, the high level impact of TOFA for the client’s business. "Road-testing” TOFA on financial arrangements commonly used in the client’s business is part of this process.
The resultant report for relevant personnel in the client’s business allows key decisions in relation to the introduction of TOFA to be made. It also allows a TOFA response to be developed in a way that best suits the business, having regard to the particular circumstances. More detailed work can then be undertaken on particular areas of focus as necessary, according to a suitable implementation timeline: see Diagram 1 below.
Diagram 1: Illustrative timeline diagram - 30 June Year End (assume 1 July 2008 start)
For further information, please complete the following form, or contact:
Gavin Marjoram, Partner
PricewaterhouseCoopers Tax
Banking & Capital Markets/ Insurance & Investment Management
Phone: + 61 2 8266 0576
