Pillar Two reporting in Australia

What you need to know about Pillar Two reporting in Australia

Pillar Two

Australia’s Pillar Two rules introduce a 15% global minimum tax for large multinational groups (EUR 750m+ revenue), together with new annual reporting and compliance obligations in Australia applying from income years beginning on or after 1 January 2024.

The first Australian filings are due by 30 June 2026 (in relation to the year ended 31 December 2024), even where no additional tax is payable.

This note sets out who is affected, what applies in Australia, and what actions are required now.

What is Pillar Two?

Pillar Two introduces a global minimum effective tax rate of 15% for large multinational enterprise (MNE) groups.

Where a group’s profits in a particular country are taxed below 15%, “top-up tax” may apply to bring the overall tax outcome up to the minimum rate.

Australia has fully implemented Pillar Two through a combination of:

• A Domestic Minimum Tax, and
• Global minimum tax rules aligned with OECD standards.

Who is in scope?

Pillar Two generally applies to MNE groups that:

• Have consolidated group revenue of €750 million or more; and
• Meet that threshold in at least two of the four previous financial years.

Both Australian-headed and foreign-headed groups with Australian entities or permanent establishments may be affected. Certain entity types (such as government bodies, pension funds and some investment vehicles) may be excluded.

What Pillar Two rules apply in Australia?

Australia has implemented all three Pillar Two charging mechanisms, aligned to the OECD Model Rules.

1. Australian Domestic Minimum Tax (DMT)

• Applies to low-taxed profits earned in Australia
• Ensures Australian profits are taxed at a minimum of 15%
• Applies for income years starting on or after 1 January 2024

2. Income Inclusion Rule (IIR)

• Applies primarily to parent entities
• Allows Australia to collect top-up tax on low-taxed foreign profits of a group
• Also applies for income years starting on or after 1 January 2024

3. Undertaxed Profits Rule (UTPR)

• A “back-stop” rule where low-tax profits are not picked up under an IIR
• Can allocate top-up tax to Australia based on group presence
• Applies for income years starting on or after 1 January 2025

What needs to be filed in Australia?

Australia has introduced four Pillar Two lodgment obligations, now streamlined into a combined process:

1. GloBE Information Return (GIR)

Combined Global and Domestic Minimum Tax Return (CGDMTR)

2. Foreign Lodgment Notification (FLN)

3. Australian DMT Return (DMTR)

4. Australian IIR/UTPR Tax Return (AIUTR)

Key reporting includes:

• GIR: a group-wide information return, generally lodged once per group (either in Australia or overseas). However, the GIR may be lodged in a foreign jurisdiction by the Ultimate Parent Entity (UPE) or Designated Filing Entity (DFE), provided the jurisdiction has a Qualifying Competent Authority Agreement (QCAA) with Australia and the GIR is lodged by the due date. In this case, a FLN must be lodged in Australia.
• Australian Pillar Two tax returns: covering DMT and any IIR or UTPR outcomes (noting the UTPR will only apply from 1 January 2025 as noted above).

The ATO has introduced a single form known as the CGDMTR which incorporates the FLN, DMTR and AIUTR. Please note this applies even where no additional tax arises, or the group relies on a safe harbour.

Failure to comply with reporting obligations may expose entities to significant penalties with interest charges potentially applying to unpaid amounts.

When are the first filings due?

• The GIR and FLN are due 18 months after the end of the first fiscal year and 15 months after the end of subsequent years.
• The AIUTR and DMTR are due 18 months after the end of the first fiscal year, with potential extensions.

Year end	Return due	Due date
31 December  2024	GIR  or FLN CGDMTR	30 June 2026  31 July 2026 (ATO lodgment deferral)
31 March 2025	GIR  or FLN CGDMTR	30 September 2026  30 September 2026
30 June 2025	GIR  or FLN CGDMTR	31 December 2026  31 December 2026
30 September 2025	GIR  or FLN CGDMTR	31 March 2027  31 March 2027
31 December 2025	GIR  or FLN CGDMTR	31 March 2027  31 March 2027

Can compliance be simplified in the early years?

Yes, but only if the conditions are met and properly documented.

Transitional Country-by-Country (CbC) safe harbour

During the transitional period, groups may be able to treat top-up tax in a jurisdiction as nil, and avoid full GloBE calculations by using existing qualified CbC report data and financial statements, where certain tests are satisfied.

This safe harbour is assessed jurisdiction-by-jurisdiction and is expected to be highly relevant for many foreign-headed groups.

Importantly, even where this safe harbour applies, Australian returns are still required, but the reported amounts may be nil or simplified.

What the ATO expects

The ATO has adopted a transitional “reasonable measures” compliance approach. In practice, this means the ATO expects groups to be able to demonstrate that they have:

• Assessed whether Pillar Two applies;
• Considered available safe harbours;
• Used appropriate data sources; and
• Documented their conclusions and governance.

Timely lodgment remains critical.

What should affected groups be doing now?

With the lodgment deadlines fast approaching, groups should:

• Confirm whether they are in scope of Pillar Two;
• Identify which Australian and foreign entities are affected;
• Assess eligibility for transitional safe harbours;
• Clarify who will lodge the GIR and Australian returns;
• Gather and validate required CbC and accounting data;
• Put in place clear internal ownership and sign-off processes.

How PKF can help

We can assist with:

• Pillar Two scoping and impact assessments;
• Transitional safe harbour analysis;
• Australian filing strategy and registrations;
• Coordination with overseas advisers;
• Preparation and review of Australian Pillar Two returns.

If you would like to discuss how Pillar Two affects your group, or what is required before 30 June 2026, please contact your PKF tax team.