Treasury consults to align company minimum tax

Treasury is currently seeking feedback in making several changes in the Taxation (Multinational-Global and Domestic Minimum Tax) Act 2024, as it aims to be consistent with the rules from the Organisation for Economic Co-operation and Development (OECD).

The consultation follows the introduction of a 15% minimum tax for large companies in 2024.

The changes are based on OECD guidance, including the Global Anti-Base Erosion (GloBE) Rules, and includes the refinement of the allocation of income and taxes for flow-through and hybrid entities, clarifications on certain tax allocation rules, and modification on when substitute loss carry-forward deferred tax assets arise.

It will also make minor amendments to ensure Safe Harbours operate correctly.

The rules are designed to ensure that large multinational enterprises (MNE) are subjected to a minimum level of tax, the OECD said.

When no Qualified Domestic Minimum Top-up Tax applies, other measures, including an Income Inclusion Rule which imposes top-up tax on a parent entity, will be implemented.

"The rules implement the domestic framework for a multinational top-up tax, by providing for the substantive computations of top-up tax under the GloBE Rules and operate to ensure that future administrative guidance released by the OECD can be incorporated in a timely and efficient manner," the consultation said.

"It is imperative that the rules reflect OECD approved documents so that Australia's implementation of the GloBE Rules maintains qualified status, which can only be achieved if the rules are implemented in a manner consistent with the GloBE Rules, as amended by any Administrative Guidance."

Treasury explained the changes will ensure the effective operation of the Top-up Tax Rules and incorporate elements of the Agreed Administration Guidance released in June 2024, December 2023 and January 2026.

The consultation is now open and closes on May 22.