Australia: ATO aligns 2025–26 company tax guidance with global minimum tax framework

The Australian Taxation Office has released updated 2025–26 company tax guidance incorporating the Global Minimum Tax framework, which imposes a 15% effective tax rate floor on in-scope multinational enterprises through a tiered top-up tax mechanism, while maintaining standard corporate rates of 25% for base rate entities and 30% for others.

The Australian Taxation Office (ATO) has updated its company tax rates 2025–26 guidance to include the Global Minimum Tax (GMT), which applies at rates ranging from 0% to 15%.

The guidance confirms that GMT applies to in-scope multinational enterprise (MNE) groups, while certain entities are excluded from Australia’s global and domestic minimum tax rules as GloBE excluded entities. A top-up tax applies where an MNE’s effective tax rate in a jurisdiction falls below the 15% minimum threshold.

Australia has rolled out its own version of the OECD’s Global Anti-Base Erosion (GloBE) Model Rules through a suite of new legislation known collectively as the Minimum Tax law. This framework targets multinational enterprises operating across borders, requiring them to meet a baseline tax standard.

The regime rests on three primary acts passed in 2024: the Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024, the Taxation (Multinational—Global and Domestic Minimum Tax) Imposition Act 2024, and the Taxation (Multinational—Global and Domestic Minimum Tax) (Consequential) Act 2024. Supporting these are the Taxation (Multinational–Global and Domestic Minimum Tax) Rules 2024 and two determinations issued in 2025 covering exemptions and qualified taxes.

The legislation must align with OECD guidance, including the GloBE Model Rules, commentary, and administrative guidance.

The rules apply to multinational groups with annual consolidated revenue of EUR 750 million or more. Two key components have different commencement dates: the Income Inclusion Rule and domestic minimum tax took effect from 1 January 2024, while the Undertaxed Profits Rule commenced from 1 January 2025.

Importantly, a group is considered in-scope if it meets the EUR 750 million threshold in at least two of the four fiscal years preceding the test year. Australian entities within these qualifying groups are subject to the domestic minimum tax component.

Corporate tax rates 2025–26

The following rates of tax apply to companies for the 2025–26 income year.

Companies

Note 1: This includes corporate limited partnerships, strata title bodies corporate, trustees of corporate unit trusts and public trading trusts.

Global Minimum Tax (GMT)

Note 2: The GMT applies to in-scope MNEs. Certain entities of an MNE group are excluded from the operation of the Australian global and domestic minimum tax (known as GloBE excluded entities). The top-up tax is applied to MNEs where their effective tax rate drops below the 15% threshold in a jurisdiction. The top-up tax rate applied to each MNE can vary but must result in the group having an effective tax rate of 15% in a jurisdiction.

Life insurance companies

RSA providers other than life insurance providers

Pooled development funds

Note 3: For tax rates where a company either starts or ceases to be a PDF during the income year, refer to Appendix 4 of the Company tax return instructions.

Credit unions

Note 4: Small credit unions are taxed on all their taxable income but note the treatment of mutual interest. Interest derived by small credit unions is exempt from tax if both:

• The credit union is an approved credit union
• The interest is paid to the credit union by its non-company members in respect of loans it made to those members.

Credit unions with a notional taxable income of at least AUD 50,000 but less than AUD 150,000 are taxed on their taxable income above AUD 49,999. Credit unions with a notional taxable income of AUD 150,000 or more are taxed on all their taxable income. A credit union’s notional taxable income is defined in subsection 6H(5) of the Income Tax Assessment Act 1936 (ITAA 1936).

Not-for-profit companies

Note 5: Not-for-profit companies with a taxable income of between AUD 417 and AUD 915 are taxed on their taxable income above AUD 416. Not-for-profit companies with a taxable income above AUD 915 are taxed on all their taxable income.

Not-for-profit companies that are base rate entities

Note 6: For the 2025–26 income year, not-for-profit companies that are base rate entities with a taxable income of between AUD 417 and AUD 762 are taxed on their taxable income above AUD 416.