Australia's amended GloBE minimum tax rules, registered by the ATO, revise CFC tax allocation, deferred tax asset treatment, and flow-through entity rules to align with OECD standards, applying retrospectively from 1 January 2024.
Australia has issued the Taxation (Multinational—Global and Domestic Minimum Tax) Amendment (2026 Measures No. 2) Rules 2026 (the Amending Rules), introducing minor amendments to the Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024 to maintain consistency with the OECD’s Global Anti-Base Erosion (GloBE) Model Rules.
This legal instrument also updates technical procedures for calculating effective tax rates and managing foreign tax credits. Key revisions focus on the allocation of taxes under controlled foreign company regimes and the treatment of deferred tax assets arising from domestic losses. Furthermore, the rules clarify the status of flow-through entities and adjust timelines for specific safe harbour provisions. These amendments ensure that local tax administration remains aligned with international standards for multinational taxation.
The instrument commences on the day after registration and applies retrospectively in relation to fiscal years starting on and after 1 January 2024.
Key areas covered in Schedule 1
New GloBE rule fixes how Blended CFC regimes interact with jurisdictional ETR (Part 1)
A new section 4-56 defines the GloBE Jurisdictional ETR for tested entities and permanent establishments, setting out three calculation paths depending on whether an MNE Group uses standard ETR rules, qualifies for a safe harbour (Transitional CbCR or QDMTT), or relies on Qualified Financial Statements.
The substantive change sits in the adjustments. CFC taxes get stripped out of the standard ETR calculation entirely, since they’re not supposed to count toward a jurisdiction’s own tax take. But where a Blended CFC Tax Regime allows the parent to claim foreign tax credits, the rule adds back the QDMTT payable into the mix. That’s the piece worth flagging for clients running blended CFC structures: It stops top-up tax from being effectively cancelled out by a domestic minimum tax credit claimed at the CFC regime level.
Substitute loss carry-forward DTA (Part 2)
The amending rules replaces section 4-95 to define when a Constituent Entity has a Substitute Loss Carry-forward Deferred Tax Asset (DTA). It arises when local tax laws require foreign source income (from CFCs, hybrid entities, or permanent establishments) to offset domestic tax losses before applying foreign tax credits. The amending rules also establish precise valuation formulas based on the applicable jurisdictional tax rate and credit carry-forwards or income recharacterisation rules, while updating rules on taking account of DTA reversals in deferred tax expenses.
Flow-through & tax transparent entities (Part 3)
The amending rules introduce the concept of a reference entity for flow-through entities, refine the definition of a tax transparent entity by linking fiscal transparency to the jurisdiction of the reference entity, and clarify that an entity located in a jurisdiction with no corporate income tax system is treated as a Hybrid Entity if it is fiscally transparent in its owner’s jurisdiction.
Administration & safe harbours (Part 4)
The amending rules insert section 8-95 providing detailed rules for allocating profit/loss, total revenue, and simplified covered taxes between Investment Entities and their Constituent Entity-owners under the Transitional CbCR Safe Harbour.
It also adds section 8-201, enabling an MNE Group to deem its Jurisdictional Top-up Tax to be zero for a stateless jurisdiction if the actual jurisdiction of creation or business location applies to an eligible QDMTT and an annual election is made.
Furthermore, the rules extend specific transitional relief years in Chapter 8 (e.g., updating year references from 2026/2028 to 2027/2029).
