Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024 (Cth)

Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024 I, Dr Jim Chalmers, Treasurer, make the following rules.

Dated 18 December 2024

Dr Jim Chalmers Treasurer

Contents Chapter 1—Preliminary etc Part 1‑1—Preliminary 1‑5 Name 1‑10 Commencement 1‑15 Authority Part 1‑2—Excluded Entities 1‑20 Excluded Entities Part 1‑3—Currency conversion 1‑25 Foreign currency translation—general Chapter 2—Liability amounts Part 2‑1—Application of the IIR 2‑5 Meaning of IIR Top‑up Tax Amount Part 2‑2—Allocation of Top‑up Tax under the IIR 2‑10 Meaning of Allocable Share 2‑15 Meaning of Inclusion Ratio Part 2‑3—IIR offset mechanism 2‑20 IIR offset mechanism Part 2‑4—Domestic Top‑up Tax Amount 2‑25 Meaning of Domestic Top‑up Tax Amount 2‑30 Amount of Domestic Top‑up Tax Amount 2‑35 Computing Top‑up Tax for the purposes of section 2‑30—principles 2‑40 Domestic Top‑up Tax Amount—special rule for consolidated groups Part 2‑5—UTPR Top‑up Tax Amount 2‑45 Meaning of UTPR Top‑up Tax Amount 2‑50 UTPR Top‑up Tax Amount—special rule for consolidated groups 2‑55 Meaning of Total UTPR Top‑up Tax Amount Part 2‑6—Allocation of Top‑Up Tax for the UTPR 2‑60 Allocation of Total UTPR Top‑Up Tax Amount to Australia 2‑65 Meaning of UTPR Percentage 2‑70 Distribution of allocated Total UTPR Top‑Up Tax Amount to Australian Constituent Entity 2‑75 Number of employees in a jurisdiction 2‑80 Meaning of Net Book Value of Tangible Assets 2‑85 Employees and the Net Book Value of Tangible Assets of Investment Entities and Securitisation Entities to be disregarded 2‑90 Employees and the Net Book Value of Tangible Assets allocated to Permanent Establishment 2‑95 Employees and the Net Book Value of Tangible Assets allocated from Flow‑through Entity Chapter 3—Computation of GloBE Income or Loss Part 3‑1—Financial accounts 3‑5 Meaning of GloBE Income or Loss 3‑10 Meaning of Financial Accounting Net Income or Loss Part 3‑2—Adjustments to determine GloBE Income or Loss Division 1—Article 3.2.1 adjustments 3‑15 Adjustment—net taxes expense 3‑20 Adjustment—Excluded Dividends 3‑25 Meaning of Excluded Dividends, Short‑term Portfolio Shareholding and Portfolio Shareholding 3‑30 Adjustment—Excluded Equity Gain or Loss 3‑35 Meaning of Excluded Equity Gain or Loss 3‑40 Adjustment—insurance reserves 3‑45 Adjustment—Included Revaluation Method Gain or Loss 3‑50 Meaning of Included Revaluation Method Gain or Loss and Other Comprehensive Income 3‑55 Adjustment—asymmetric foreign currency gains or losses 3‑60 Meaning of tax functional currency and accounting functional currency 3‑65 Adjustment—policy disallowed expenses 3‑70 Adjustment—prior period errors and changes in accounting principles 3‑75 Adjustment—accrued pension expense 3‑80 Adjustment—qualified debt release amount 3‑85 Meaning of qualified debt release amount Division 2—Other Article 3.2 adjustments 3‑90 Adjustment—stock‑based compensation expense 3‑95 Adjustment—Arm's Length Principle and tax/accounting permanent differences in respect of cross‑border transactions 3‑100 Adjustment—Arm's Length Principle and transactions between Constituent Entities located in the same jurisdiction 3‑105 Meaning of Arm's Length Principle 3‑110 Adjustment—Refundable Tax Credits and transferable tax credits 3‑115 Qualified Refundable Tax Credits—amounts 3‑120 Marketable Transferable Tax Credits—amounts 3‑125 Meaning of Qualified Refundable Tax Credit, Non‑Qualified Refundable Tax Credit and Refundable Tax Credit 3‑130 Meaning of Marketable Transferable Tax Credit 3‑135 Meaning of Marketable Price Floor 3‑140 Meaning of Non‑Marketable Transferable Tax Credit and Other Tax Credit 3‑145 Adjustment—loss on transfer of purchased Non‑Marketable Transferable Tax Credits 3‑150 Adjustment—assets and liabilities that are subject to fair value or impairment accounting 3‑155 Adjustment—Aggregate Asset Gain—election 3‑160 Adjustment—Aggregate Asset Gain—effect 3‑165 Adjustment—Aggregate Asset Gain—allocation of amounts 3‑170 Meaning of Aggregate Asset Gain, Net Asset Gain, etc 3‑175 Meaning of Look‑back Period and Loss Year 3‑180 Adjustment—Intragroup Financing Arrangements 3‑185 Meaning of Intragroup Financing Arrangement 3‑190 Meaning of Low‑Tax Entity and High‑Tax Counterparty 3‑195 Meaning of Low‑Tax Jurisdiction 3‑200 Adjustment—election to apply consolidated accounting treatment 3‑205 Adjustment—insurance company amounts charged to policyholders for taxes paid in respect of returns to policy holders 3‑210 Adjustment—distributions paid or payable in respect of Additional Tier One Capital or Restricted Tier One Capital 3‑215 Adjustments as necessary for Chapters 6 and 7 Part 3‑3—International Shipping Income exclusion 3‑220 Adjustment—certain shipping income 3‑225 Meaning of International Shipping Income, etc. 3‑230 Meaning of Qualified Ancillary International Shipping Income, etc. 3‑235 International traffic Part 3‑4—Allocation of income or loss between a Main Entity and a Permanent Establishment 3‑240 Meaning of Financial Accounting Net Income or Loss—Permanent Establishment 3‑245 Adjustment of Permanent Establishment's Financial Accounting Net Income or Loss 3‑250 Computing GloBE Income or Loss of the Main Entity in respect of a Permanent Establishment Part 3‑5—Allocation of income or loss from a Flow‑through Entity 3‑255 Constituent Entity that is a Flow‑through Entity—Financial Accounting Net Income or Loss Chapter 4—Computation of Adjusted Covered Taxes Part 4‑1—Adjusted Covered Taxes 4‑5 Meaning of Adjusted Covered Taxes 4‑10 Meaning of Accrued Current Covered Tax Expense 4‑15 Meaning of Additions to Covered Taxes 4‑20 Meaning of Reductions to Covered Taxes 4‑25 No double counting of Covered Taxes 4‑30 Additional Current Top‑up Tax where MNE Group has no Net GloBE Income and tax falls short of expected tax 4‑35 Additional Current Top‑up Tax under section 4‑30—Excess Negative Tax Expense Carry‑forward Part 4‑2—Definition of Covered Taxes 4‑40 Meaning of Covered Taxes Part 4‑3—Allocation of Covered Taxes from one Constituent Entity to another Constituent Entity 4‑45 Allocation of amounts from Constituent Entity to Permanent Establishment—general rule 4‑50 Allocation of amounts from Tax Transparent Entity to a Constituent Entity‑owner of the Tax Transparent Entity 4‑55 Allocation of amounts from Constituent Entity‑owner to CFC 4‑60 Meaning of Blended CFC Tax Regime 4‑65 Allocation of amounts from Constituent Entity‑owner to Hybrid Entity or Reverse Hybrid Entity 4‑70 Amounts accrued in financial accounts of Constituent Entity‑owner on distribution from Constituent Entity to Constituent Entity‑owner—allocation to Constituent Entity 4‑75 Allocation of amounts in respect of Passive Income—inclusion in Constituent Entity's Adjusted Covered Taxes 4‑80 Allocation of amounts from Permanent Establishment to Main Entity Part 4‑4—Mechanism to address temporary differences 4‑85 Meaning of Total Deferred Tax Adjustment Amount 4‑90 Total Deferred Tax Adjustment Amount—effect of Substitute Loss Carry‑forward DTA 4‑95 Meaning of Substitute Loss Carry‑forward DTA 4‑100 Effect of Recaptured Deferred Tax Liability 4‑105 Meaning of Recaptured Deferred Tax Liability 4‑110 Meaning of Recapture Exception Accrual 4‑115 Meaning of Disallowed Accrual and Unclaimed Accrual Part 4‑5—The GloBE Loss Election 4‑120 GloBE Loss Election 4‑125 GloBE Loss Deferred Tax Asset of an MNE Group 4‑130 GloBE Loss Election for an Ultimate Parent Entity 4‑135 GloBE Loss Deferred Tax Asset of an Ultimate Parent Entity Part 4‑6—Post‑filing adjustments and tax rate changes 4‑140 Effect of adjustment to the liability for Covered Taxes 4‑145 Tax rate changes and unpaid current tax expense Chapter 5—Computation of Effective Tax Rate Part 5‑1—Determination of Effective Tax Rate 5‑5 Meaning of Effective Tax Rate 5‑10 Effective Tax Rate—Excess Negative Tax Expense administrative procedure 5‑15 Meaning of Net GloBE Income and Net GloBE Loss Part 5‑2—Top‑up Tax 5‑20 Meaning of Top‑up Tax Percentage 5‑25 Meaning of Excess Profit 5‑30 Meaning of Jurisdictional Top‑up Tax 5‑35 Certain amounts of Domestic Top‑up Tax disregarded 5‑40 Top‑up Tax of a Constituent Entity 5‑45 Treatment of Stateless Constituent Entities Part 5‑3—Substance‑based Income Exclusion 5‑50 Substance‑based Income Exclusion Amount 5‑55 Payroll Carve‑out Amount 5‑60 Meaning of Eligible Payroll Costs and Eligible Employee 5‑65 Tangible Asset Carve‑out Amount 5‑70 Operating leases and intragroup finance leases 5‑75 Meaning of Eligible Tangible Asset 5‑80 Allocation of amounts between a Main Entity and a Permanent Establishment 5‑85 Allocation of amounts in relation to Flow‑through Entities 5‑90 Allocation of amounts in relation to Deductible Dividend Regimes Part 5‑4—Additional Current Top‑up Tax 5‑95 Additional Current Top‑up Tax—ETR Adjustment Provisions 5‑100 Additional Current Top‑up Tax—Adjusted Covered Taxes less than expected amount Part 5‑5—De minimis exclusion 5‑105 De minimis exclusion 5‑110 Meaning of Average GloBE Revenue etc. 5‑115 Recalculations under an ETR Adjustment Provision Part 5‑6—Minority‑Owned Constituent Entities 5‑120 Minority‑Owned Constituent Entities that comprise a Minority‑Owned Subgroup 5‑125 Minority‑Owned Constituent Entities that are not part of a Minority‑Owned Subgroup 5‑130 Meaning of Minority‑Owned Constituent Entity and Minority‑Owned Parent Entity 5‑135 Meaning of Minority‑Owned Subsidiary and Minority‑Owned Subgroup Chapter 6—Corporate restructurings and holding structures Part 6‑1—Application of consolidated revenue threshold to Group mergers and demergers 6‑5 Applicable MNE Groups—mergers 6‑10 Applicable MNE Groups—demergers Part 6‑2—Constituent Entities joining and leaving an MNE Group Division 1—Transfers of Ownership Interests 6‑15 Application of this Division 6‑20 Target's assets etc. included in MNE Group's Consolidated Financial Statements 6‑25 Target's Financial Accounting Net Income or Loss and Adjusted Covered Taxes 6‑30 Historical carrying value of target's assets and liabilities 6‑35 Target's Eligible Payroll Costs and Tangible Asset Carve‑out Amount 6‑40 Deferred tax assets and deferred tax liabilities 6‑45 Target's Top‑up Tax if Parent Entity in 2 or more MNE Groups Division 2—Transfer of Ownership Interests treated as transfer of assets and liabilities 6‑50 Transfer of Ownership Interests treated as transfer of assets and liabilities Part 6‑3—Transfer of assets and liabilities 6‑55 Acquisitions and disposals of assets and liabilities 6‑60 GloBE Reorganisations 6‑65 Meaning of GloBE Reorganisation and Non‑qualifying Gain or Loss 6‑70 Fair value adjustments Part 6‑4—Joint Ventures 6‑75 Joint Ventures Part 6‑5—Multi‑Parented MNE Groups 6‑80 Multi‑Parented MNE Groups 6‑85 Meaning of Multi‑Parented MNE Group etc. Chapter 7—Tax neutrality and distribution regimes Part 7‑1—Ultimate Parent Entity that is a Flow‑through Entity 7‑5 Flow‑through Entity that is Ultimate Parent Entity—reduce GloBE Income and Covered Taxes 7‑10 Flow‑through Entity that is Ultimate Parent Entity—reduce GloBE Loss 7‑15 Application of sections 7‑5 and 7‑10 to Permanent Establishment Part 7‑2—Ultimate Parent Entity subject to Deductible Dividend Regime 7‑20 Ultimate Parent Entity subject to Deductible Dividend Regime—reduce GloBE Income and Covered Taxes 7‑25 Ultimate Parent Entity subject to Deductible Dividend Regime—reduce GloBE Income and Covered Taxes of other Constituent Entities 7‑30 Meaning of Deductible Dividend Regime 7‑35 Meaning of Deductible Dividend Part 7‑3—Eligible Distribution Tax Systems 7‑40 Deemed distribution tax election 7‑45 Meaning of Eligible Distribution Tax System 7‑50 Effect of election—amount in respect of deemed distribution tax added to Adjusted Covered Taxes 7‑55 Deemed Distribution Tax Recapture Account 7‑60 Recapture Account Loss Carry‑forward 7‑65 Effect of positive balance of Deemed Distribution Tax Recapture Account after 4 Fiscal Years—reduce Adjusted Covered Taxes for original year 7‑70 Distribution taxes excluded in Adjusted Covered Taxes 7‑75 Effect of Constituent Entity leaving jurisdiction, etc. Part 7‑4—Effective Tax Rate computation for Investment Entities Division 1—Application 7‑80 Application of this Part 7‑85 Insurance Investment Entity treated as Investment Entity 7‑90 Computing GloBE Income or Loss of Investment Entity Division 2—Allocable Share of Top‑up Tax of Investment Entity 7‑95 Allocable Share of Top‑up Tax of Investment Entity Division 3—Top‑up Tax of Investment Entity etc. 7‑100 Top‑up Tax etc. of Investment Entity—primary deeming rule 7‑105 Computing Jurisdictional Top‑up Tax for the purposes of computing Top‑up Tax of Investment Entity 7‑110 Meaning of Allocable GloBE Income or Loss Division 4—Top‑up Tax of non‑Investment Entity 7‑115 Top‑up Tax of Constituent Entity that is not Investment Entity Part 7‑5—Investment Entity tax transparency election 7‑120 Application of this Part 7‑125 Investment Entity tax transparency election 7‑130 Effect of election—Investment Entity treated as Tax Transparent Entity 7‑135 Effect of revocation of election—Investment Entity treated as Tax Transparent Entity Part 7‑6—Taxable distribution method election 7‑140 Application of this Part 7‑145 Taxable distribution method election 7‑150 Effect of election—distributions and deemed distributions received by Constituent Entity‑owner included in computing its GloBE Income, etc. 7‑155 Effect of election—where positive balance of Undistributed Net GloBE Income Account after 3 Fiscal Years, increase Top‑up Tax for tested year 7‑160 Meaning of Undistributed Net GloBE Income Account 7‑165 Deemed distributions 7‑170 Effect of revoking election Chapter 8—Administration Part 8‑2—Safe harbours Division 1—Preliminary 8‑5 Application of this Part to Minority‑Owned Constituent Entities, Joint Ventures and Investment Entities Division 2—Transitional CbCR Safe Harbour Subdivision A—Transitional CbCR Safe Harbour 8‑10 Transitional CbCR Safe Harbour—general rule 8‑15 Meaning of Transition Period Subdivision B—De minimis test 8‑20 Meeting the De minimis test 8‑25 Meaning of Total Revenue of MNE Group 8‑30 Meaning of Profit (Loss) before Income Tax 8‑35 Meaning of Qualified CbC Report Subdivision C—Simplified ETR test 8‑40 Meeting the Simplified ETR test 8‑45 Meaning of Simplified ETR 8‑50 Meaning of Simplified Covered Taxes 8‑55 Meaning of Transition Rate Subdivision D—Routine profits test 8‑60 Meeting the Routine profits test 8‑65 Meaning of CbCR Resident Subdivision E—Qualified Financial Statements 8‑70 Meaning of Qualified Financial Statements 8‑75 Use of same kind of Qualified Financial Statements Subdivision F—Special rules for particular circumstances 8‑80 Transitional CbCR Safe Harbour—special rule for Joint Ventures 8‑85 Transitional CbCR Safe Harbour—special rule for Ultimate Parent Entity that is Flow‑through Entity 8‑90 Transitional CbCR Safe Harbour—special rule for Deductible Dividend Regimes 8‑95 Transitional CbCR Safe Harbour—special rules for Investment Entities and their Constituent Entity‑owners 8‑100 Transitional CbCR Safe Harbour—special rule for Net Unrealised Fair Value Loss 8‑105 Transitional CbCR Safe Harbour—exclusions Subdivision G—Treatment of Hybrid Arbitrage Arrangements 8‑110 Transitional CbCR Safe Harbour—Hybrid Arbitrage Arrangements 8‑115 Meaning of Hybrid Arbitrage Arrangement 8‑120 Meaning of deduction/non‑inclusion arrangement 8‑125 Meaning of duplicate loss arrangement 8‑130 Meaning of duplicate tax recognition arrangement 8‑135 Entities treated as Constituent Entities for purposes of this Subdivision 8‑140 Financial statements for purposes of this Subdivision 8‑145 Financial statements—Flow‑through Entity 8‑150 Arrangement treated as having been entered into after 15 December 2022 Division 3—Simplified Calculations Safe Harbour Subdivision A—Simplified Calculations Safe Harbour 8‑155 Simplified Calculations Safe Harbour—general rule Subdivision B—SC De minimis test, SC ETR test and SC Routine profits test 8‑160 Meeting the SC De minimis test 8‑165 Meeting the SC ETR test 8‑170 Meeting the SC Routine profits test Subdivision C—NMCE simplified calculations 8‑175 NMCE simplified calculations 8‑180 NMCE simplified calculations election 8‑185 Meaning of Non‑material Constituent Entity (or NMCE) Subdivision D—Miscellaneous 8‑190 Meaning of Total Revenue and Income Tax Accrued (Current Year) of Constituent Entity 8‑195 Meaning of Relevant CbC Regulations and Country‑by‑Country Reporting regulations Division 4—Qualified Domestic Minimum Top‑up Tax (QDMTT) Safe Harbour 8‑200 QDMTT Safe Harbour—general rule 8‑205 Disqualification from election—disputed amounts 8‑210 Disqualification from election—switch‑off rule 8‑215 Meaning of OECD Securitisation Entity 8‑220 Meaning of Securitisation Arrangement Division 5—Transitional UTPR Safe Harbour 8‑225 Transitional UTPR Safe Harbour Chapter 9—Transition rules Part 9‑1—Tax attributes upon transition 9‑5 Pre‑Transition Year deferred tax assets and liabilities 9‑10 Pre‑Transition Year deferred tax assets and liabilities—amounts 9‑15 Pre‑Transition Year intra‑MNE Group asset transfers 9‑20 Meaning of Transition Year Part 9‑2—Transitional relief for the Substance‑based Income Exclusion 9‑25 Application of this Part 9‑30 Transitional relief for Payroll Carve‑out Amount 9‑35 Transitional relief for Tangible Asset Carve‑out Amount Part 9‑3—Exclusion from the UTPR of MNE Groups in the initial phase of their international activity 9‑40 Total UTPR Top‑up Tax Amount reduced to zero 9‑45 If Australia is the Reference Jurisdiction, section 9‑40 does not apply etc. 9‑50 Meaning of Reference Jurisdiction Chapter 10—Definitions Part 10‑1—Defined terms 10‑5 Definitions 10‑10 GloBE Implementation Framework 10‑15 Qualified GloBE taxes 10‑20 Direct Ownership Interest—interest differently classified Part 10‑2—Definitions of Securitisation Entity, Flow‑through Entity, Tax Transparent Entity, Reverse Hybrid Entity, and Hybrid Entity 10‑25 Meaning of Securitisation Entity 10‑30 Meaning of Flow‑through Entity 10‑35 Meaning of Tax Transparent Entity 10‑40 Meaning of Reverse Hybrid Entity 10‑45 Fiscal transparency and meaning of Tax Transparent Structure 10‑50 Deemed Flow‑through Entity and Tax Transparent Entity 10‑55 Meaning of Hybrid Entity Part 10‑3—Location of dual‑located entities 10‑60 Dual‑located entities 10‑65 Dual‑located Parent Entity located in non‑IIR jurisdiction