Coming into full effect from 1 July 2010, the TOFA Act will align taxation more closely with the commercial recognition of gains and losses.

DST Global Solutions' HiPortfolio is designed to support TOFA in a number of areas, including its tax, reporting and transaction engines. The solution will also provide added flexibility and operational efficiencies when administering TOFA-eligible entities including instruments, portfolios, positions and tax lots.

According to Ian Mathieson, CEO at DST Global Solutions Australia and New Zealand, the TOFA-ready project team has worked closely with clients and industry practitioners over the past two years producing significant results. He commented: "With the enhancements to HiPortfolio, the system is now designed to help our clients be TOFA compliant, and provides users with the relevant information for internal and external calculations and reporting. This is important as TOFA is mandatory, and we have worked to help our clients ensure they are ready to comply with this major update to Australian taxation legislation."

To assist its client base prepare for TOFA, DST Global Solutions has worked with key Australian custodians, fund managers and taxation practitioners to extend HiPortfolio's existing capabilities. This collaboration has resulted in a TOFA-ready platform designed for accurate and efficient fiscal administration.

The Act is designed to reduce tax distortions, to tax financial arrangements based on economic substance and to enhance financial risk management, especially for hedging. Taxation will be more closely aligned with the commercial recognition of gains and losses, with six methods of bringing gains and losses to account. These methods will be determined by a number of factors and can apply to financial arrangements held at 1 July 2010 or to those acquired from this date forward.

Mathieson said: "Firms need to be prepared for the significant data and reporting hurdles they will face, as well as understand and plan the implementation of TOFA for their client base. TOFA will have a significant impact on the investment management sector and we may very well see clients switching to TOFA-capable firms which can effect this complex taxation change".

Developed in Australia at DST Global Solutions' Investment Management Solutions (IMS) R&D Centre, the HiPortfolio TOFA module is available for implementation in Q1 2010. Experienced IMS Professional Services teams will support industry-wide implementations at client firms.