Lodging paying and other obligations for Pillar Two

Lodgments

New lodgment requirements

Four new lodgment requirements are introduced as part of the Australian global and domestic minimum tax, consistent with the Global Anti-Base Erosion Model RulesExternal Link (GloBE Rules). These are:

1. GloBE Information Return (GIR)
2. Foreign lodgment notification
3. Australian IIR/UTPR Tax Return (AIUTR)
4. Australian DMT Tax Return (DMTR).

We are currently developing forms for the foreign lodgment notification, the AIUTR and the DMTR. The forms will be developed in consultation with external stakeholders through the Pillar Two Global and Domestic Minimum Tax Working Group and Digital Service Provider Working GroupExternal Link. These products will be available to taxpayers in advance of the first lodgments, due by 30 June 2026.

GIR and foreign lodgment notification

The GIR is an information return developed by the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework containing data to enable tax administrators to assess a multinational enterprise groups' (MNE groups) compliance with the GloBE Rules.

Under the primary legislation, the default requirement is for each Australian group entity in an MNE group to lodge a GIR. Consistent with the GloBE Rules, the primary legislation provides the ability for group entities to nominate another entity in the MNE group to lodge one single GIR on their behalf. This can comprise of a designated local entity lodging to the ATO or a foreign entity (a foreign Ultimate Parent Entity or a designated filing entity) lodging to a foreign government agency.

When lodging the GIR with a foreign government agency and not locally with the ATO, to effectively fulfill each Australian group entity's GIR lodgment obligation:

• Notification must be given to the Commissioner of Taxation by either the entity itself or the nominated designated local entity by lodging a foreign lodgment notification form, which we are currently developing.
• The foreign government agency the GIR is lodged with must have a Qualifying Competent Authority Agreement with Australia. The GIR will then be exchanged with the ATO as per the Qualifying Competent Authority Agreement and in line with the dissemination approach agreed by OECD Inclusive Framework.

An Australian group entity is required to give a GIR to the Commissioner even if the amount of Australian IIR/UTPR tax or Australian DMT tax is nil.

There is also still an obligation to lodge the AIUTR and DMTR even if the GIR has been lodged overseas.

AIUTR and DMTR

The AIUTR and DMTR are Australian domestic tax returns. They are currently being developed to enable the triggering of Australia's domestic assessment and pay provisions. The GIR is an information only return.

The AIUTR is for the global minimum tax, while the DMTR is for the domestic minimum tax.

Under the primary legislation, each group entity:

• is required to lodge an AIUTR where they have an Australian IIR/UTPR tax amount (including a nil amount)
• is required to lodge a DMTR where they have an Australian DMT tax amount (including a nil amount).

Entities have the option to nominate the designated local entity to file on their behalf. The entity’s lodgment obligation will be fulfilled where the designated local entity lodges by the respective lodgment due date.

Note: Excluded entities don't have an obligation to lodge the AIUTR or DMTR, nor do they have an obligation to lodge the GIR and foreign lodgment notification form.

Lodgment due dates

The GIR, where the GIR is being lodged in Australia, foreign notification form, AIUTR and DMTR are required to be lodged 18 months after the end of the first fiscal year and 15 months after the end of the subsequent fiscal years.

Under the primary legislation we will have the ability to extend the lodgment deadline for the AIUTR and DMTR, but not the GIR or the foreign notification form.

Penalties

What administrative penalties can apply

The existing uniform penalty provisions contained in Schedule 1 of the Taxation Administration Act 1953 apply, with base penalty amounts similar to those imposed for significant global entities. This means, for example:

• penalties for failure to lodge on time, which can apply to entities that do not lodge an approved form by the due date. The base penalty amount is multiplied by 500.
• penalties for false and misleading statements or for taking a position that is not reasonably arguable. The base penalty amount is multiplied by 2 times the base penalty amount.

In addition, an administrative penalty can apply for failing to keep records about the minimum tax law.

OECD guidance on penalties

The Organisation for Economic Co-operation and Development (OECD) has released guidance on transitional penalty relief, which outlines that administrators should consider providing a soft landing for MNE groups during a transition period.

This includes recommending administrators consider not applying penalties or sanctions in connection with the filing of the GIR during the transition period where an MNE group has taken 'reasonable measures' to ensure the correct application of the GloBE Rules. 'Reasonable measures' is not defined and should be understood in light of each jurisdiction's existing rules and practices.

ATO guidance on penalties

We are currently considering consultation feedback received to date about the application of penalties to the global and domestic minimum tax. The need for updated guidance will be explored in future consultation.

Record keeping

Keeping records on global and domestic minimum tax

The legislation inserts a new provision in the Taxation Administration Act 1953 which provides record keeping requirements on the global and domestic minimum tax.

Broadly, the provision requires an Australian group entity, as well as joint ventures and joint venture subsidiaries of an MNE group, to keep records that fully explain whether it has complied with the global and domestic minimum tax legislation. This includes, but is not limited to, all records that explain and show the basis of every disclosure in the GIR, AIUTR and DMTR lodged or exchanged with the Commissioner.

The dissemination approach agreed upon by the OECD Inclusive Framework sets out what information from the GIR is exchanged with the Commissioner based on Australia's GloBE taxing rights. Broadly, this means records must be kept for the GIRs detailed computations for those jurisdictions in respect of which Australia has taxing rights (including computations in relation to Australia itself). Records must also be kept in relation to the MNE group structure in the GIR regardless of whether Australia has taxing rights.

Records must be kept in writing in English, or in a format that is readily accessible and convertible to English and must enable the entity’s liability to top-up tax to be readily determined.

Excluded entities, which may not have an obligation to lodge, are still required to keep records relating to their status as an excluded entity.

Records must be kept until either:

• the end of 8 years after those records were prepared or obtained
• 8 years after the completion of the transactions or acts to which those records relate
• the end of the period of review for an assessment to which those records relate (if extended), whichever is the later.

More information

For more information, see:

• Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two)External Link
• Commentary to the GloBE Rules (25 April 2024)External Link
• Standard OECD template for GloBE Information Return (GIR)External Link
• Agreed Administrative Guidance (2 February 2023) (PDF, 1.24MB)This link will download a file
• Agreed Administrative Guidance (18 December 2023) (PDF, 478KB)This link will download a file