The updated guidance will help taxpayers determine whether the transitional CBC reporting safe harbour applies and how it may simplify their Pillar Two compliance obligations.
The Australian Taxation Office (ATO) has released updated Global and domestic minimum tax guidance alongside updated guidance on the transitional country-by-country (CbC) safe harbour on 22 October 2025.
The transitional CBC reporting safe harbour can relieve a MNE group from having to undertake detailed top-up tax calculations for a jurisdiction, if the MNE group can demonstrate, based on CBC reporting and financial accounting data, that it meets one of 3 tests for that jurisdiction. It is only available during a transitional period.
An eligible MNE group can elect to apply the transitional CBC reporting safe harbour from the first fiscal year the MNE group becomes subject to the global and domestic minimum tax for a jurisdiction. Where it applies, it deems jurisdictional top-up tax to be zero for that fiscal year. Even where the CBC reporting safe harbour applies, an Australian IIR/UTPR return and Australian DMT return showing Australian IIR, UTPR and DMT tax amounts of zero must still be lodged unless exempted under the draft legislative instrument
Pillar Two implementation in Australia
Australia has implemented the Global Anti-Base Erosion Model RulesOpens in a new window (GloBE Rules) by introducing a global and domestic minimum tax.
The GloBE Rules provide for a coordinated system of taxation intended to ensure multinational enterprise groups (MNE groups) are subject to a global minimum tax rate of 15% in each of the jurisdictions where they operate. They are a key part of the Organisation for Economic Co-operation and Development (OECD)/G20 Two-Pillar SolutionOpens in a new window, to address the tax challenges arising from the digitalisation of the economy.
On 10 December 2024, primary legislation that implements the framework of the GloBE Rules in Australia received royal assent. The primary legislation also makes consequential amendments. These amendments include provisions necessary for the administration of top-up tax within the existing tax administration framework, consistent with the GloBE Rules.
On 23 December 2024, subordinate legislation containing the detailed computational rules was registered as a legislative instrument. This means the subordinate legislation is now in force, noting it is subject to the standard parliamentary process for legislative instruments, including a disallowance period.
The global and domestic minimum tax comprises of:
- a global minimum tax which consists of 2 interlocking rules
- the Income Inclusion Rule (IIR) – acts as the primary rule which broadly allows Australia to apply a top-up tax on multinational parent entities located in Australia if the group’s effective tax rate in another jurisdiction is below 15%
- the Undertaxed Profits Rule (UTPR) – acts as a backstop rule which allows Australia to apply a top-up tax on constituent entities located in Australia if the group’s effective tax rate in another jurisdiction is below 15% and where the profit is not brought into charge under an IIR
- a domestic minimum tax, which operates consistently with the GloBE Rules and provides Australia the ability to claim primary rights to impose top-up tax over any low-taxed profits in Australia, in priority over the IIR and UTPR.
The IIR and the domestic minimum tax will apply to fiscal years starting on or after 1 January 2024. The UTPR will apply to fiscal years starting on or after 1 January 2025.
Updated information about global and domestic minimum tax
Detail is now available on the transitional country-by-country (CBC) safe harbour.
ATO has updated its Global and domestic minimum tax webpage to include new guidance on the transitional country-by-country (CBC) reporting safe harbour. This guidance will help taxpayers determine whether the transitional CBC reporting safe harbour applies and how it may simplify their Pillar Two compliance obligations.
What’s included in the update
This guidance now includes an overview of the transitional CBC reporting safe harbour, including:
- Conditions for access
- Effects of applying the safe harbour
- The transition period it applies to.
It also covers how to apply the 3 transitional CBC reporting safe harbour tests:
The new web guidance includes information on data sources, including:
- What data can be used when applying the safe harbour
- Information on qualified CBC reports and qualified financial statements.
If you elect to apply the transitional CBC reporting safe harbour
As part of ATO’s compliance engagement approach for Pillar Two, taxpayers need to provide information to confirm eligibility. For example, information confirming that the amounts used for the relevant transitional CBC reporting safe harbour computations are either sourced from:
- qualified CBC reports
- qualified financial statements.
Visit the Transitional CBC reporting safe harbour for more information.
Looking ahead
ATO will continue to expand the web guidance in the coming months, including new content on Pillar Two interactions with the tax consolidation regime.
