Pillar Two Global and Domestic Minimum Tax legislation passes both Houses of Parliament

There has been some progress in relation to the Global Minimum Tax Pillar Two legislation. 

This week, the three Bills implementing the Pillar Two Global and Domestic Minimum Tax measures in Australia passed through both Houses of Parliament. Enactment of these measures should be a formality with Royal Assent expected very shortly, making the Bills law.

However, as the Subordinate Legislation containing the bulk of the Rules is yet to be tabled in parliament, uncertainty remains in relation to the financial reporting implications for groups with a 31 December 2024 financial year end date.

We will be providing further guidance as more information becomes available. 

What you need to know 

On Tuesday and Wednesday this week, the three principle enabling Bills for the Australian Global and Domestic Minimum Tax regime passed through the Senate and are now awaiting Royal Assent. These Bills comprise:

  • Taxation (Multinational – Global and Domestic Minimum Tax) Imposition Bill 2024 (Imposition Bill) 
  • Taxation (Multinational – Global and Domestic Minimum Tax) Bill 2024 (Main Bill) 
  • Taxation Laws Amendment (Multinational – Global and Domestic Minimum Tax) (Consequential) Bill 2024 (Consequential Bill). 

These Bills should receive Royal Assent shortly. However, most of the Pillar Two rules are contained in a separate legislative instrument, being the Taxation (Multinational – Global and Domestic Minimum Tax) Rules 2024 (Subordinate Legislation). The Subordinate Legislation has not been registered or introduced into parliament yet. 

The passing of the Bills is particularly important for taxpayers who need to consider the impact of disclosures required in relation to the new Pillar Two regime, as part of their financial reporting obligations for the 31 December 2024 year end. The ultimate position is dependent on whether the Pillar Two legislation and rules meet the ‘substantively enacted’ threshold in accordance with the Australian Accounting Standards Board’s guidelines.

Although the three enabling Bills have been passed by parliament, we understand the substantive enacted status of the Australian Pillar Two law is dependent on when the legislative instruments containing the Subordinate Legislation is registered on the Federal Register of Legislation under the Legislation Act 2003. 

If the substantively enacted threshold is met prior to 31 December 2024, groups preparing accounts for the year ending 31 December 2024 will be required to consider their Pillar Two related disclosure obligations, with very tight reporting deadlines. As the Bills are linked to a legislative instrument containing the detailed rules, which is yet to be registered, some uncertainty remains as to whether these will be registered such that substantive enactment status is achieved prior to 31 December 2024. 

Groups with a 31 December 2024 year-end reporting obligation need to be well prepared to address Pillar Two disclosure requirements if substantive enactment status is achieved prior to 31 December 2024, and if not before 31 December 2024, then early in the new year. 

BDO Comment 

The BDO corporate tax and IFRS & corporate reporting teams are working closely to provide you with further updates on the Australian Pillar Two legislation and Rules, particularly what it means for taxpayers and 31 December 2024 corporate reporting entities, as further information becomes available. 

For clients impacted by the measures, BDO recommends: 

  • Considering all financial reporting disclosure requirements 
  • Determining whether the group is captured by the measures, and if captured, carefully identifying the entities captured 
  • Evaluating the group’s eligibility for the Transitional Safe Harbour and simplified calculation methodologies 
  • Planning the organisation’s approach to reporting, including decisions around whether to prepare and lodge internally, outsource, or a hybrid approach 
  • Reviewing existing finance infrastructure and any interrelated systems, and the quality of data contained within those systems 
  • If organisational change is required, managing any impacted stakeholders, and planning the change process well in advance 
  • Seeking advice in relation to application of the rules, particularly where uncertainty exists. 

If you would like further information in relation to the application of Pillar Two, please reach out to your local BDO corporate & international tax adviser. Alternatively, further information in relation to the measures can be found in BDO’s previous Pillar articles.