Pillar Two Domestic Form Presentation
Draft data points for the domestic return were discussed. Feedback was received on both the design and content of the form, as well as suggestions for the accompanying instructions. This feedback has helped progress the design of the domestic form.
As the GloBE information return (GIR) will contain data which can be used to assess multinational entity groups compliance with the GloBE rules, we have taken a minimalistic approach to the domestic form with an emphasis on not duplicating data points where possible.
Issues raised at this session included how we will administer registrations for entities that are not historically recognised by our tax system, such as joint operations.
The ATO noted that it will not have a formal registration process. Communications will be issued closer to the time lodgments are due to ensure in-scope entities are able to lodge.
Guidance and Administration
Guidance and engagement channels were discussed, as well as administrative matters relating to the primary legislation.
We have worked on addressing feedback received from the session by way of public advice and guidance (PAG) products, including website content, the development of a new Practical Compliance Guideline (PCG), and consideration of updates to existing PAG products. We will continue to work on guidance on residual issues including those outlined below.
There was a request for the prioritisation of guidance around the penalties for lodgment obligations. This has been addressed with the Draft PCG 2025/D3 Global and domestic minimum tax lodgment obligations - transitional approach.
We are prioritising guidance on the operation of the new decline to rule provisions and have released Draft PCG 2025/D3 and updated Draft Taxation Ruling TR 2006/11DC Private Rulings which was released on 16 July 2025, with comments closing on 29 August 2025. Feedback received is being finalised.
Updates to website guidance include information on the tax calculation mechanics under Australia's global and domestic minimum tax. This information outlines special rules that exist for permanent establishments, flow-through entities and GloBE joint ventures.
We have included details of the different Pillar Two lodgment obligations and liability provisions, including information about the joint and several liability rules, and the obligations and liabilities of specific entity types. This includes practical examples of lodgment obligations in common scenarios. Furthermore, we are seeking to streamline the lodgment experience for the domestic tax return by:
- Combining the foreign lodgment notification form, Australian income inclusion rule /undertaxed profits rule tax return (AIUTR), and domestic minimum tax return (DMTR) into one domestic tax return.
- Ensuring designated local entities can be lodged on behalf of other entities that have lodgment obligations in the combined form.
- Currently developing a Legislative Instrument specifying circumstances in which a group entity is not required to lodge an AIUTR or DMTR (which form part of the combined domestic form).
These outcomes will help ensure we reduce the compliance burden in respect of lodging the Australian combined domestic form.
Scope and interactions
The scope of the rules and the interactions with current Australian tax law was discussed. The website now features additional guidance on the consequences of being an excluded entity, as well as a new page dedicated to Australian interactions which addresses some of the feedback received from this session.
The group requested guidance on the interactions with the Foreign Income Tax Offset rules, particularly around practical and timing issues, which will be addressed in web guidance later.
We received some feedback on the need for guidance on foreign exchange translation rules. If further website guidance is required it will be considered, noting the law already provides detailed foreign exchange translation provisions.
Joint arrangements
Members raised general uncertainty around how the GloBE Rules interact with joint arrangement accounting.
This included uncertainty as to when an arrangement will constitute an 'Entity' for Pillar Two purposes, particularly for arrangements that are not separate legal persons, partnerships or trusts. We are considering applying an administrative approach to this issue in respect of arrangements created in Australia.
In that context, members raised a related uncertainty as to when an arrangement will have Pillar Two lodgment obligations. The ATO is considering additional web guidance including examples to address these matters.
We are also considering the circumstances in which a group entity could be exempted from lodging an AIUTR or DMTR for a fiscal year. We have published a Draft Legislative Instrument LI2025/D17 Taxation Administration (Exemptions from Requirement to Lodge Australian IIR/UTPR tax return and Australian DMT tax return) Determination 2025 and Draft Explanatory Statement. These are available for public consultation until 24 September 2025.
Some additional issues raised included:
- How to identify joint arrangements as part of the group structure for domestic filings where they do not have existing identifiers, that is, tax file number, Australian Business Number, Australian Company Number.
- How the deeming rules interact with scope rules.
We are considering addressing these items with website guidance and domestic form instructional guidance.
Members asked if section 3-255, or Part 7-1, of the Australian Minimum Tax Rules applies to GloBE joint ventures, and if so, how. We are considering what website guidance we can provide to clarify these issues. Some issues raised related to matters of policy, which are matters for Treasury and the Government, and may require Organisation for Economic Co-operation and Development (OECD) guidance.
Tax consolidation, Transitional CbCR safe harbour and Credit treatment
Tax consolidation
The focus of this discussion is on the treatment of income tax consolidated groups and multiple entry consolidated (MEC) groups under Pillar Two. We plan to draft web guidance on a number of these issues, including:
- Lodgment obligations and the calculation, and allocation, of top-up tax for consolidated groups and MEC groups.
- Scope of the election to apply consolidated accounting treatment and whether a MEC group can elect to eliminate transactions within the broader accounting group.
- How to avail GIR reporting elections such as the aggregate reporting election and transitional simplified reporting election.
- GloBE treatment of transfers of ownership as deemed asset transfers vs transfers of ownership interests.
Members raised the allocation of Australian domestic minimum tax (DMT) to entities and whether this could be based on a top-down (consolidated) approach versus bottom-up (entity-by-entity) approach. We are currently considering our administrative and compliance approach in respect of the issue.
An issue around how the transitional integrity rules apply to transfers of ownership interest before the commencement of a transition year was raised. It was noted that transitional integrity rules have been included in recently released OECD administrative guidance, which is not yet incorporated into Australian law.
Transitional CbCR safe harbour
Members raised queries relating to the following areas:
- Practical application of the safe harbour, such as for groups that do not have or prepare consolidated financial statements and considering what are 'Qualified Financial Statements'.
- Application to specific structures, such as the application in respect of flow-through ultimate parent entities.
- Misalignment of guidance.
We plan to address the practical application queries with web guidance.
In terms of the application of the safe harbour to specific structures, our recommendation is for members to send any queries to our dedicated mailbox on a structure-by-structure basis. If issues become prevalent then we will consider addressing through broader messaging.
Members noted that there may be some misalignment between the country-by-country reporting (CbCR) and Global and Domestic Minimum Tax Act (GDMTA) materials. The ATO will consider the issue raised.
We are planning further web guidance on safe harbours and ask you to email us at pillar2project@ato.gov.au for any further feedback or questions.
Credit treatment
We plan to address the issues raised in relation to this item with more web guidance, showing examples. This may include guidance concerning the amendment period in relation to the foreign income tax offset claim, timing issues relating to when an entity can claim a foreign income tax offset in relation to foreign DMT tax and the operation of the new integrity rule in section 770-145 of the ITAA 1997.
A question about whether an Australian taxpayer with a controlled foreign company in a foreign jurisdiction could claim a foreign income tax offset in respect of foreign DMT tax paid by a different entity in that foreign jurisdiction was asked. Currently we are not planning guidance in this area, as the rules are prescriptive around when the foreign income tax offset may be claimed.