Taxation (Multinational - Global and Domestic Minimum Tax) Amendment (2025 Measures No. 1) Rules 2025 (F2025L01550)
Schedule 1 Amendments
Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024
10 At the end of Part 4-1
Add:
Division 2 - Qualified flow-through ownership interests
4-36 Application of Division
This Division has effect despite anything in Division 1 of this Part.
4-37 Excluded Equity Gain or Loss - qualified flow-through ownership interests - general case
(1) This section applies if:
(a) an election under subsection 3-31(1) for an MNE Group applies to a jurisdiction and a Fiscal Year; and
(b) a Constituent Entity of the MNE Group located in the jurisdiction has a qualified flow-through ownership interest for the Fiscal Year; and
(c) the Constituent Entity is not mentioned in subsection 4-39(1).
(2) If the Constituent Entity's adjusted investment amount in respect of the qualified flow-through ownership interest exceeds zero for the Fiscal Year, add to the Constituent Entity's Adjusted Covered Taxes for the Fiscal Year the lesser of the following:
(a) that excess;
(b) the sum of the amounts covered by subsection (3) for the Fiscal Year.
(3) This subsection covers each of the following:
(a) the amount of any tax credit, other than a Qualified Refundable Tax Credit, with respect to the qualified flow-through ownership interest;
(b) the amount of any tax-deductible loss with respect to the qualified flow-through ownership interest, multiplied by the applicable domestic tax rate;
to the extent that the amount is treated, for financial accounting purposes, as reducing the Constituent Entity's tax expense for the Fiscal Year.
(4) If the Constituent Entity's adjusted investment amount in respect of the qualified flow-through ownership interest for the Fiscal Year is exceeded by the sum of the amounts covered by subsection (5) for the Fiscal Year, subtract the excess from the Constituent Entity's Adjusted Covered Taxes for the Fiscal Year, subject to subsection (6).
(5) This subsection covers each of the following:
(a) the amount of any tax credit in respect of the qualified flow-through ownership interest;
(b) the amount of any tax-deductible loss in respect of the qualified flow-through ownership interest, multiplied by the applicable domestic tax rate;
(c) the amount of any distribution (including a return of capital) in respect of the qualified flow-through ownership interest;
(d) the amount of the proceeds of sale of all or a part of the qualified flow-through ownership interest.
(6) A subtraction may only be made under subsection (4) in respect of the following amounts for the Fiscal Year to the extent of any addition to the Constituent Entity's Adjusted Covered Taxes under subsection (2):
(a) an amount mentioned in paragraph (5)(a) that is a Qualified Refundable Tax Credit;
(b) an amount mentioned in paragraph (5)(c) or (d).
4-38 Meaning of qualified flow-through ownership interest , investment amount and adjusted investment amount
(1) A qualified flow-through ownership interest of a Constituent Entity is an investment in a particular Tax Transparent Entity held by the Constituent Entity directly, or indirectly through one or more other Tax Transparent Entities that are not Constituent Entities of the MNE group, if:
(a) the investment:
(i) is treated, for tax purposes, as an equity interest in the jurisdiction in which the Constituent Entity is located; and
(ii) would be so treated under an Authorised Financial Accounting Standard in the jurisdiction in which the Tax Transparent Entity operates, but only if the Tax Transparent Entity's assets, liabilities, income, expenses and cash flows are not consolidated on a line-by-line basis in the Consolidated Financial Statements of the Ultimate Parent Entity of the MNE Group; and
(b) at the time the Constituent Entity acquired the investment, the Constituent Entity:
(i) could not reasonably have expected that its total return (including distributions, the tax benefits of tax losses and the tax benefits of Qualified Refundable Tax Credits, but excluding the tax benefits of other kinds of tax credits) from the investment would equal or exceed the total fair market value of the consideration provided in respect of the investment (the investment amount ); and
(ii) could have reasonably expected a return on a portion of the investment amount in the form of tax credits other than Qualified Refundable Tax Credits.
(2) However, an investment mentioned in subsection (1) is not a qualified flow-through ownership interest if any of the following applies:
(a) the investment is not held by the Constituent Entity as a genuine economic interest;
(b) the Constituent Entity is protected, to any extent, from a diminution of the investment amount;
(c) in the jurisdiction in which the Constituent Entity is located, compliance with the GloBE Rules, as implemented in that jurisdiction, is a condition of the transfer, through the particular Tax Transparent Entity in which the investment subsists, of the benefit of tax credits in respect of that investment.
(3) To calculate the adjusted investment amount of a Constituent Entity in respect of a qualified flow-through ownership interest for a Fiscal Year, reduce the investment amount by the sum of all amounts covered by subsection 4-37(5) for all previous Fiscal Years in respect of the qualified flow-through ownership interest. However, the adjusted investment amount may not be less than zero.
4-39 Excluded Equity Gain or Loss - qualified flow-through ownership interests - proportional amortisation
(1) This section applies if:
(a) an election under subsection 3-31(1) for an MNE Group applies to a jurisdiction and a Fiscal Year; and
(b) a Constituent Entity of the MNE Group located in the jurisdiction has a qualified flow-through ownership interest for the Fiscal Year; and
(c) either:
(i) the Constituent Entity uses the proportional amortisation method of accounting in relation to the qualified flow-through ownership interest for the Fiscal Year; or
(ii) the Constituent Entity does not use that method in relation to the qualified flow-through ownership interest for the Fiscal Year, but an election under subsection (4) applies to the Constituent Entity for the Fiscal Year.
(2) If the final result of the following method statement is exceeded by the sum of all amounts covered by subsection (3) for the Fiscal Year, subtract the excess from the Constituent Entity's Adjusted Covered Taxes for the Fiscal Year.
Method statement
Step 1: Work out the sum of the amounts covered by paragraphs (3)(a) and (b) for the Fiscal Year.
Step 2: Work out the sum of all amounts covered by paragraphs (3)(a) and (b) that, at the time the Constituent Entity acquired the qualified flow-through ownership interest, the Constituent Entity could reasonably have expected to receive over the life of the qualified flow-through ownership interest.
Step 3: Divide the result of step 1 for the Fiscal Year by the result of step 2.
Step 4: Multiply the result of step 3for the Fiscal Year by the investment amount. This the final result.
(3) This subsection covers each of the following:
(a) the amount of any tax credit in respect of the qualified flow-through ownership interest;
(b) the amount of any tax-deductible loss in respect of the qualified flow-through ownership interest, multiplied by the applicable domestic tax rate;
(c) the amount of any distribution (including a return of capital) in respect of the qualified flow-through ownership interest;
(d) the amount of the proceeds of sale of all or a part of the qualified flow-through ownership interest.
Election
(4) A Filing Constituent Entity for an MNE Group may make an election for the MNE Group under this subsection that applies to a specified Constituent Entity of the MNE Group.
(5) The election begins to apply at the later of the following:
(a) the start of the Fiscal Year in which the Constituent Entity acquires the qualified flow-through ownership interest;
(b) the start of the Fiscal Year in which the Constituent Entity becomes subject to this instrument in relation to the qualified flow-through ownership interest.
(6) The election may not be revoked.