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

CHAPTER 6 - CORPORATE RESTRUCTURINGS AND HOLDING STRUCTURES  

PART 6-3 - TRANSFER OF ASSETS AND LIABILITIES  

SECTION 6-70   FAIR VALUE ADJUSTMENTS  
Election

6-70(1)    
Subsection (2) applies if, because of an event (the triggering event ), a Constituent Entity of an MNE Group (the adjusting Constituent Entity ) is required or permitted to adjust the basis of its assets or the amount of its liabilities to fair value for tax purposes in the jurisdiction in which it is located.

6-70(2)    
A Filing Constituent Entity for an MNE Group may make an election for the MNE Group under this subsection that applies to the adjusting Constituent Entity.

6-70(3)    
An election under subsection (2) is:

(a)    an Annual Election (if the election specifies that it is an Annual Election); or

(b)    a Five-Year Election (if the election specifies that it is a Five-Year Election).

Adjustments

6-70(4)    
In computing the GloBE Income or Loss of the adjusting Constituent Entity for a Fiscal Year, apply the rules in subsections (5) , (6) and (7) if:

(a)    an election under subsection (2) applies to the adjusting Constituent Entity and the Fiscal Year; and

(b)    the Fiscal Year ends after the triggering event occurred.

6-70(5)    
Include an amount of gain or loss in respect of each of the adjusting Constituent Entity ' s assets and liabilities computed as follows:

(a)    first, compute the difference between:

(i) the carrying value for financial accounting purposes of the asset or liability immediately before the day of the triggering event; and

(ii) the fair value of the asset or liability immediately after the triggering event;

(b)    then, if the triggering event is in connection with a GloBE Reorganisation in relation to which the adjusting Constituent Entity has an amount of Non-Qualifying Gain or Loss, reduce the result of paragraph (a) by that amount.

Note:

If the amount of Non-Qualifying Gain or Loss is a negative number, reducing the result of paragraph (a) by that amount would increase it.

6-70(6)    
Use the fair value for financial accounting purposes of the asset or liability immediately after the triggering event.

6-70(7)    
Include the amount mentioned in subsection (5) as follows:

(a)    if the election is an Annual Election - include all of that amount in relation to the Fiscal Year in which the triggering event occurs;

(b)    if the election is a Five-Year Election - include one fifth of that amount in relation to the Fiscal Year in which the triggering event occurs and in relation to each of the subsequent 4 Fiscal Years.

6-70(8)    
If paragraph (7)(b) applies, and the adjusting Constituent Entity ceases to be a Constituent Entity of the MNE Group in a Fiscal Year (the leaving year ) that is one of the 5 Fiscal Years mentioned in that paragraph, then despite that paragraph:

(a)    include one-fifth of the amount mentioned in subsection (5) in relation to the Fiscal Year in which the triggering event occurs; and

(b)    include one-fifth of that amount in relation to each of the subsequent 4 Fiscal Years that end before the leaving year; and

(c)    include any remaining part of that amount in relation to the leaving year.