Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024

CHAPTER 3 - COMPUTATION OF GloBE INCOME OR LOSS  

PART 3-2 - ADJUSTMENTS TO DETERMINE GloBE INCOME OR LOSS  

Division 2 - Other Article 3.2 adjustments  

SECTION 3-90   ADJUSTMENT - STOCK-BASED COMPENSATION EXPENSE  

3-90(1)    
Subsection (2) applies if:

(a)    an election under subsection (5) for an MNE Group applies to:

(i) the jurisdiction in which a Constituent Entity of the MNE Group is located; and

(ii) a Fiscal Year; and

(b)    an amount (the stock-based deduction amount ) is allowed under the law of the jurisdiction as a deduction, in respect of a stock-based compensation expense, in computing the Constituent Entity ' s taxable income for a period that ends in the Fiscal Year; and

(c)    the Constituent Entity:

(i) incurred the stock-based compensation expense; and

(ii) received the property (including use of property) or services for which the stock-based compensation was provided; and

(d)    the stock-based compensation expense is susceptible of being reliably and consistently traced to the Constituent Entity.

3-90(2)    
In computing the Constituent Entity ' s GloBE Income or Loss for the Fiscal Year, adjust the Constituent Entity ' s Financial Accounting Net Income or Loss for the Fiscal Year by applying the rules in subsection (3) .

3-90(3)    
The rules are as follows:

(a)    exclude as an expense the stock-based compensation expense, and instead include as an expense the stock-based deduction amount;

(b)    if the stock-based compensation expense arises in connection with an option that expires without exercise in the Fiscal Year - include as income the total of the stock-based deduction amounts included as an expense under paragraph (a) , in relation to the stock-based compensation expense, for:

(i) periods that end before the start of the Fiscal Year; and

(ii) the period that ends in the Fiscal Year;

(c)    if some of the stock-based compensation expense arising from a transaction has been recorded in the Constituent Entity ' s financial accounts for one or more previous Fiscal Years - include as income an amount equal to the amount (if any) by which:

(i) the cumulative amount of the stock-based compensation expense allowed as an expense in the computation of the Constituent Entity ' s GloBE Income or Loss in the previous Fiscal Years;

exceeds:

(ii) the cumulative amount that would have been included under paragraph (a) in relation to the stock-based compensation expense if the election had applied to those Fiscal Years.

3-90(4)    
The rule in paragraph (3)(c) does not apply in relation to a stock-based compensation expense that arises in connection with an option that expires without exercise before the end of the Fiscal Year.

Election

3-90(5)    
A Filing Constituent Entity for an MNE Group may make an election for the MNE Group under this subsection that applies to a specified jurisdiction.

3-90(6)    
An election under subsection (5) is a Five-Year Election.

Revocation of election

3-90(7)    
Subsection (8) applies if:

(a)    the election mentioned in paragraph (1)(a) is revoked; and

(b)    the stock-based compensation expense arises in connection with an option that has not been exercised, and that has not expired without exercise, before the start of the first Fiscal Year (the subsequent year ) to which the election does not apply as a result of revocation.

3-90(8)    
In computing the GloBE Income or Loss of the Constituent Entity for the subsequent year, adjust the Constituent Entity ' s Financial Accounting Net Income or Loss for the subsequent year so as to include as income an amount equal to the amount (if any) by which:

(a)    the cumulative amount included as an expense under paragraph (3)(a) , in relation to the stock-based compensation expense, for Fiscal Years prior to the subsequent year;

exceeds:

(b)    the cumulative amount of the stock-based compensation expense that would have been allowed as an expense in the computation of the Constituent Entity ' s GloBE Income or Loss if the election had not applied to the prior Fiscal Years.