With the registration of the Pillar Two subordinate legislation on 23 December 2024, the full package of legislation implementing the Pillar Two Global Anti-Base Erosion (GloBE) rules in Australia now has legal effect. This may trigger new current tax disclosures for financial statements.
To recap, the Australian GloBE rules include the following:
- an Income Inclusion Rule (IIR) which applies for income years starting on or after 1 January 2024;
- a domestic minimum top-up tax (DMT) which applies for income years starting on or after 1 January 2024; and
- an Undertaxed Profits Rule (UTPR) which applies for income years starting on or after 1 January 2025.
Further background to the Australian Pillar Two rules as well as a brief outline of the OECD Model GloBE Rules (Model Rules) is set out at Appendix 1.
The recent legislative developments are as follows:
- the 'primary' legislation which implements the Pillar Two Global Anti-Base Erosion (GloBE) rules in Australia received Royal Assent (i.e. enactment) on 10 December 2024. The primary legislation includes:
- an Assessment Act which implements the framework for imposition of top-up tax under the Australian GloBE rules;
- an Imposition Act which imposes the top-up tax payable under the Australian GloBE rules; and
- a Consequential amendments Act which makes consequential and miscellaneous amendments to the Australian tax laws;
- the 'subordinate' or 'secondary' legislation was registered on 23 December 2024 and commenced on 24 December 2024). The subordinate legislation includes the detailed operational Australian Pillar Two rules. The subordinate legislation is in force but subject to a disallowance period outlined further in Appendix 1.
Together, the primary and subordinate legislation total over 280 pages of provisions, with over 450 pages of accompanying explanatory materials.
Key features of the Australian Pillar Two legislation are outlined in our report.
