ATO gives further guidance to MNEs ahead of Pillar 2 reporting

Last Friday (9 January), the ATO released tips to help multinational enterprise (MNE) groups prepare for pillar two lodgments, as discussed in its November 2025 webinar.

From the income years starting on or after 1 January 2024, multinationals operating in Australia with a global turnover of €750 million or more will be required to adhere to the Global Base Erosion Model Rules (GloBE), an international framework to impose a 15 per cent global minimum tax.

While the ATO has indicated it would take a ‘soft’ approach to enforcement during the transitional period, it emphasised that multinational groups would need to demonstrate genuine attempts at compliance to avoid penalties.

In its webinar, the ATO fielded attendees’ questions concerning lodgment channels for the Combined Global and Domestic Minimum Tax Return (CGDMTR). It reminded MNE groups lodging through the ATO’s online services for businesses or agents that there was a 20-entity limit.

For groups lodging via Digital Service Providers offerings, there was a 300-entity limit. The ATO advised MNEs lodging for more than 300 entities to contact the ATO directly for lodgment options.

Attendees also sought more information regarding lodgment of the GloBE Information Return (GIR). According to information currently available on the ATO website, the GIR would be required to be lodged 18 months after the end of the first fiscal year the laws applied, and 15 months after the end of subsequent fiscal years.

As such, the first tranche of documentation is set to be due on 30 June 2026.

Safe harbours were also a point of discussion in the webinar. The ATO noted that the transitional country-by-country reporting safe harbour could relieve an MNE group from having to undertake top-up tax calculations for certain jurisdictions in the transitional period, if it met one of three tests.

The de minimis test could be applied to jurisdictions where total revenue was less than €10 million and profit was less than €1 million. In contrast, the effective tax rate (ETR) test considered whether a firm was already paying a minimum ETR in a certain jurisdiction.

Lastly, the routine profits test sought to compare total profits with substance-based income relating to payroll costs and tangible assets.

To ensure compliance with the Pillar Two rules, Grant Thornton tax experts gave a series of recommendations in a recent insight.

First, it urged MNE groups to confirm whether or not they were captured by the legislation and confirm their ultimate parent entity (UPE) jurisdiction, as staggered implementation dates could complicate this.

It also suggested that groups consider whether they were eligible for any safe harbour provisions, establish governance processes to demonstrate compliance and evaluate their current systems and data readiness to support disclosures to tax authorities.

The Tax Office said it would hold more information sessions in the coming months to support compliance and minimise the need for enforcement action.