The Australian Taxation Office (ATO) has released a crucial draft Practical Compliance Guideline, PCG 2025/D3, that outlines how it will manage lodgment obligations, penalties, and private rulings under Australia’s new Minimum Tax (Pillar Two) regime. Based on the OECD’s GloBE (Global Anti-Base Erosion) rules, this framework targets large multinational enterprise (MNE) groups with a global turnover of at least EUR 750 million, requiring them to pay a minimum 15% effective tax rate in every jurisdiction where they operate.
For affected MNE groups operating in or through Australia, this represents a significant shift. With the first round of lodgment obligations due by 30 June 2026, time is of the essence.
Key Takeaways from the ATO’s Draft Guidance
1. New Lodgment Requirements
In-scope MNE groups will now be required to lodge several new returns, including:
- GloBE Information Return (GIR) – The core OECD-standardised reporting form.
- Foreign Notification Form (FNF) – Required if the GIR is lodged overseas.
- Australian IIR/UTPR Tax Return (AIUTR) and Australian DMT Return (DMTR) – For global and domestic minimum tax liabilities.
For simplicity, the ATO plans to combine these into one “Combined Global and Domestic Minimum Tax Return (CGDMTR)”, although the final format is still pending.
2. Transitional Penalty Relief
Between now and 30 June 2028, the ATO is adopting a more supportive compliance approach. Penalties may be fully remitted if an MNE group can demonstrate it has acted in good faith and taken reasonable steps to comply.
Such reasonable steps may include:
- Preparing timely lodgments
- Maintaining records of tax positions
- Engaging early with the ATO if issues arise
- Correcting mistakes proactively
3. Strategic Opportunity for Early Movers
The guidance strongly encourages MNE groups to review their systems, governance, and compliance models now, before enforcement ramps up. Those who delay may face stricter scrutiny and higher risk of penalties post-transition period.
4. Limitations on Private Rulings
In addition, the ATO updated its private rulings policy to reflect the complexity of Pillar Two. The Commissioner may decline to issue a ruling where international rules are still evolving or where foreign tax law is involved.
Why This Matters to Your Business
Navigating Pillar Two is not just about ticking compliance boxes — it’s about future-proofing your group’s tax strategy in a rapidly changing global tax landscape.
At Boa & Co. Chartered Accountants, we are already helping clients assess their readiness, interpret the rules, and prepare a roadmap for timely, penalty-free compliance. With deep expertise in both Australian and international tax compliance, our team can support you in:
- Performing gap analysis of your current systems
- Developing a compliant reporting framework
- Engaging with the ATO on your behalf
- Preparing or reviewing returns like the GIR, CGDMTR, and more
Act Now — Before the Compliance Clock Runs Out
If your business is part of a multinational group or operates across borders, now is the time to review your Pillar Two obligations and compliance processes. Boa & Co. Chartered Accountants is here to help you navigate this complex tax landscape with clarity and confidence. To speak with one of our experienced advisors, you can call us on 1300 952 286, email [email protected], or visit our website at www.boanco.com.au.
Let’s ensure you stay ahead of this significant regulatory shift — with confidence.