Pillar Two Implementation in Australia: ATO releases further guidance on reporting obligations

Following the initial rollout of Pillar Two rules in Australia, the Australian Taxation Office (ATO) has now released further guidance detailing the lodging, payment, and compliance obligations for multinational enterprise (MNE) groups under the Global Anti-Base Erosion (GloBE) framework.

Following the initial rollout of Pillar Two rules in Australia, the Australian Taxation Office (ATO) has now released further guidance detailing the lodging, payment, and compliance obligations for multinational enterprise (MNE) groups under the Global Anti-Base Erosion (GloBE) framework.

The ATO has confirmed four key lodgment requirements for entities in scope of Pillar Two:

1. GloBE Information Return (GIR)

A comprehensive return developed under OECD guidance, the GIR must be lodged by each Australian group entity unless a designated local or foreign entity lodges on their behalf.

2. Foreign Lodgment Notification

If the GIR is lodged overseas (e.g., by a foreign parent), Australian entities must notify the ATO via a foreign lodgment notification form. This is only valid if the foreign jurisdiction has a Qualifying Competent Authority Agreement (QCAA) with Australia.

3. Australian IIR/UTPR Tax Return (AIUTR)

Required for entities subject to top-up tax under the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR). The ATO is currently developing this form.

4. Australian DMT Tax Return (DMTR)

Applicable to entities liable for the Domestic Minimum Tax (DMT), ensuring Australia retains taxing rights over low-taxed domestic profits.

These forms are expected to be available ahead of the first lodgment deadline of 30 June 2026 for the 2024 calendar year.

Key takeaways for taxpayers

Record keeping

Entities must maintain robust documentation to support GloBE calculations and compliance.

Penalties Mitigation

Non-compliance with lodgment or payment obligations may result in significant penalties.

Coordination

MNE groups should coordinate globally to determine who will lodge the GIR and ensure proper notification is made to the ATO.

What this means for you

With the compliance landscape evolving rapidly, Australian entities within MNE groups must act now to:

• Assess their Pillar Two obligations for the 2024 year.

• Determine whether the GIR will be lodged locally or overseas.

• Prepare for the upcoming lodgment forms and ensure systems are in place for timely submission.

For a comprehensive overview of Australia’s Pillar Two framework and its potential implications for your business, we invite you to read our original article on PKF Insights.

PKF’s Transfer Pricing specialists are closely monitoring developments and are ready to assist clients in navigating these new requirements.