The ATO has updated Taxation Determination TD 2022/9 to reflect US GILTI amendments under the One Big Beautiful Bill Act 2025, while confirming that its interpretation of GILTI under Australia’s hybrid mismatch rules remains unchanged.
The Australian Taxation Office (ATO) has issued an Addendum to Taxation Determination TD 2022/9 by the Commissioner of Taxation on 23 September 2026 to account for amendments to the US global intangible low-taxed income (GILTI) regime introduced under the One Big Beautiful Bill Act 2025. The amendments do not alter the ATO’s existing interpretation of how GILTI interacts with Australia’s hybrid mismatch rules.
Key updates include the reclassification of income types and alterations to corporate tax deductions and credits under American law. Despite these international legislative shifts, the Commissioner of Taxation clarifies that the underlying regulatory view regarding foreign income tax inclusions remains consistent.
These administrative changes are scheduled to take effect starting 1 January 2026, ensuring the determination reflects the most current international tax standards.
Commissioner’s view remains unchanged
The ATO maintains that section 951A of the US Internal Revenue Code 1986 is an inclusion provision for a minimum tax regime, rather than a foreign law provision corresponding to Australia’s controlled foreign company (CFC) assessing provisions (sections 456 and 457 of the Income Tax Assessment Act 1936).
Impact on hybrid mismatch rules
Because Australia has no equivalent minimum tax inclusion provision for this purpose, amounts included under GILTI/NCTI are not treated as dual inclusion income under Australia’s hybrid mismatch rules. Consequently, these inclusions do not neutralise or affect whether a deduction/non-inclusion mismatch arises.
Specific changes to the US GILTI regime under OBBBA
The Addendum incorporates specific statutory modifications introduced by the US OBBBA legislation for US taxable years beginning after 31 December 2025:
- Expanded CFC scope: The net deemed tangible income return was removed from section 951A calculations, removing the reduction previously allowed for a deemed “normal” return on tangible property.
- Rebranding to NCTI: The regime and tax inclusions are formally renamed to Net CFC Tested Income (NCTI).
- Section 250 deduction: The deduction available to domestic corporations under section 250 is reduced from 50% to 40%.
- Deemed paid credit: The foreign tax credit allowance under section 960(d) is increased from 80% to 90%.
