The Australian Taxation Office (ATO) has updated guidance and clarified exemptions under Legislative Instrument 2025/28, specifying which multinational group entities may be exempt from lodging Australian DMT and IIR/UTPR tax returns. Technical amendments to the global and domestic minimum tax framework reinforce alignment with OECD GloBE rules, while transitional guidance covers penalties and filing obligations for MNEs through mid-2028.
The Australian Taxation Office (ATO) has released updated guidance on Pillar 2 compliance, and finalised its first round of technical updates to its global and domestic minimum tax framework.
The updated guidance, published on 6 January 2026, covers lodging, payment, and other obligations, as well as specific requirements for tax consolidated groups. It has been updated to reflect Legislative Instrument (LI) 2025/28, Taxation Administration (Exemptions from Requirement to Lodge Australian IIR/UTPR Tax Return and Australian DMT Tax Return) Determination 2025, which outlines exemptions from certain Pillar 2 lodgment requirements
LI 2025/28
The Legislative Instrument LI 2025/28 Taxation Administration (Exemptions from Requirement to Lodge Australian IIR/UTPR tax return and Australian DMT tax return) Determination 2025, together with its explanatory statement has been registered and published on the Federal Register of Legislation on 22 December 2025.
LI 2025/28 outlines the situations in which a Group Entity of an Applicable MNE Group is not required to file an Australian DMT or IIR/UTPR tax return for a given Fiscal Year.
Under the legislative instrument, entities that may be exempt from lodging a DMTR for a fiscal year include:
- certain subsidiary members of tax consolidated groups or multiple entry consolidated (MEC) groups
- entities that are not GloBE located in Australia, other than a stateless constituent entity created in Australia or a main entity of an Australian GloBE permanent establishment
- certain GloBE securitisation entities
- certain flow-through entities that cannot have an Australian DMT tax liability.
Given the AIUTR covers both Australian IIR tax and Australian UTPR tax liabilities, entities will only be exempt from lodging an AIUTR for a fiscal year under specific circumstances in which these liabilities will always be nil.
The legislative instrument sets out two circumstances that must both be met for a fiscal year before the exemption will apply:
- Entities that may fall within the first circumstance include:
- entities that are not parent entities, or which are parent entities but which are not GloBE located in Australia
- parent entities that are GloBE located in Australia but which only hold direct and indirect ownership interests in other group entities or GloBE joint ventures that are themselves GloBE located in Australia
- parent entities that are GloBE located in Australia but which cannot have an Australian IIR tax liability greater than zero because a higher-tier parent entity is required to apply a qualified income inclusion rule.
- These entities must also be covered by the second circumstance in order to benefit from the exemption. Entities that may do so include:
- certain subsidiary members of consolidated groups and MEC groups
- entities that are not GloBE located in Australia, other than a main entity of an Australian permanent establishment
- entities that would have an Australian UTPR tax liability of nil due to the application of one or more qualified income inclusion rules or in combination with the group’s eligibility for the transitional UTPR safe harbour
- certain GloBE investment entities, insurance investment entities and GloBE securitisation entities.
Entities may be exempt from the requirement to lodge one or both of AIUTR and DMTR for a fiscal year depending on their circumstances.
GloBE-aligned global minimum tax amendments finalised
The updated global and domestic minimum tax framework, reinforces the government’s commitment to the OECD/G20 Inclusive Framework under BEPS Pillar 2.
The Taxation (Multinational—Global and Domestic Minimum Tax) Amendment (2025 Measures No. 1) Rules 2025 were registered on 5 January 2026 and have now taken effect, giving legal force to a set of targeted changes that were consulted on in October 2025.
These amendments largely reflect the refinements proposed during the consultation process. They clarify how certain equity interests are treated under the GloBE rules, introduce provisions addressing qualified flow-through tax benefits, permit a specific election for regulated mutual insurance companies, and adjust the treatment of structured finance vehicles to better align with OECD guidance.
The Rules were enacted in late 2024 to establish Australia’s domestic framework for a multinational top-up tax, setting out how top-up tax is calculated in line with the OECD GloBE Model Rules, as supplemented by related commentary, administrative guidance, and safe harbour provisions.
The subsequent amendments are designed to ensure that OECD-issued administrative guidance is properly embedded in the Australian rules. This alignment is essential for Australia’s regime to be recognised as a “qualified” implementation of the GloBE Rules, which requires the domestic framework to be applied consistently with OECD-approved standards.
Government officials have indicated that this is not the final stage of refinement. Further changes are likely as the OECD issues additional guidance and other countries advance their own Pillar 2 regimes.
Earlier, On 26 November 2025, the ATO issued guidance on its transitional approach to penalties and compliance expectations for the four new Pillar 2 filing obligations, providing clarity for MNEs during the transition period covering fiscal years starting on or before 31 December 2026 and ending by 30 June 2028.
