The Australian government has finalized its Pillar Two tax framework, which introduces top-up taxes under the Australian Domestic Minimum Tax (DMT) and Australian Income Inclusion Rule (IIR). The Taxation (Multinational – Global and Domestic Minimum Tax) Rules 2024 were officially registered on 23 December 2024, ensuring that all aspects of Australia’s domestic and global minimum tax regime are now in effect.
Key Takeaways from the New Rules
1. Effective Date
The new rules apply to income years commencing on or after 1 January 2024 and will impact multinational enterprises (MNEs) operating in Australia.
2. Key Components of the Legislation
The Rules clarify how businesses must compute and allocate:
- GloBE Income or Loss – Determining income calculations under the OECD’s Global Anti-Base Erosion (GloBE) Model Rules.
- Adjusted Covered Taxes – Defining the tax amounts that qualify under the framework.
- Application to Investment & Tax Transparent Entities – Outlining how funds, trusts, and other tax-transparent entities will be treated.
- Safe Harbour Provisions – Providing certain businesses with temporary relief measures.
- Transitional Provisions for MNE Groups – Allowing companies time to adapt their compliance and reporting processes.
3. Compliance Challenges
With the retrospective application of these rules, MNEs must review their global tax structures and ensure their tax governance frameworks align with the new requirements.
How Boa & Co. Can Help
With new global tax rules in effect, businesses must act quickly to assess their exposure and implement compliance measures. At Boa & Co. Chartered Accountants, we can:
- Review your Pillar Two tax position and assess compliance risks.
- Assist with top-up tax computations and reporting requirements.
- Guide you through safe harbour and transitional provisions.
Call us at 1300 952 286, email [email protected], or visit www.boanco.com.au for a consultation.