{"id":"C2024A00132","name":"Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024","slug":"taxation-multinational-global-and-domestic-minimum-tax-act-2024","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"132 of 2024","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":436421,"registerId":"C2024A00132-fast-fetch-1775953622961","compilationNumber":null,"startDate":"2026-04-12","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\n---\n\n![Commonwealth Coat of Arms of Australia](image.001.png)\n\n \n\n \n\n \n\n \n\n \n\n \n\nTaxation (Multinational—Global and Domestic Minimum Tax) Act 2024\n\nNo. 132, 2024\n\n \n\n \n\n \n\n \n\n \n\nAn Act to implement a multinational top‑up tax, and for related purposes\n\n \n\n \n\n \n\nContents\n\nPart 1—Preliminary\n\n1 Short title\n\n2 Commencement\n\n3 Interpreting this Act\n\n4 Geographical application of this Act\n\n5 Application of this Act to Fiscal Years\n\nPart 2—Liability\n\nDivision 1—Australian IIR tax (income inclusion rule tax)\n\n6 Liability to tax—Australian IIR tax\n\n7 Meaning of IIR Top‑up Tax Amount\n\nDivision 2—Australian DMT tax (domestic minimum top‑up tax)\n\n8 Liability to tax—Australian DMT tax\n\n9 Meaning of Domestic Top‑up Tax Amount\n\nDivision 3—Australian UTPR tax (undertaxed profits rule tax)\n\n10 Liability to tax—Australian UTPR tax\n\n11 Meaning of UTPR Top‑up Tax Amount\n\nPart 3—Core Group and Entity concepts\n\nDivision 1—Groups, Entities and Permanent Establishments\n\n12 Meaning of Applicable MNE Group\n\n13 Meanings of Entity and Ultimate Parent Entity\n\n14 Meanings of MNE Group and Group\n\n15 Meaning of Group Entity\n\n16 Meaning of Constituent Entity\n\n17 Groups—general structure\n\n18 Groups—structure with Permanent Establishment\n\n19 Meanings of Permanent Establishment and Main Entity\n\nDivision 2—Excluded Entities\n\n20 Meaning of Excluded Entity\n\n21 Meaning of Governmental Entity\n\n22 Meanings of International Organisation and Non‑profit Organisation\n\n23 Meanings of Pension Fund and Pension Services Entity\n\n24 Meanings of Real Estate Investment Vehicle and Investment Fund\n\n25 Meaning of Excluded Service Entity\n\nDivision 3—Joint Ventures and Multi‑Parented MNE Groups\n\n26 Joint Ventures\n\n27 Meanings of JV Group and JV Subsidiary\n\n28 Multi‑Parented MNE Groups\n\nPart 4—Rules\n\n29 The Rules—general\n\n30 The Rules—conferral of powers and functions\n\n31 The Rules—incorporation by reference\n\n32 The Rules—retrospective application\n\n33 The Rules—miscellaneous\n\nPart 5—Interpretation\n\nDivision 1—Definitions\n\n34 Definitions\n\n35 Currency translation of aggregate variation—definition of Material Competitive Distortion\n\nDivision 2—Elections\n\n36 Five‑Year Elections\n\n37 Annual Elections\n\nDivision 3—Ownership Interests and Ownership Interest Percentages\n\n38 Meanings of Ownership Interest, Direct Ownership Interest and Indirect Ownership Interest\n\n39 Meanings of Ownership Interest Percentage, Direct Ownership Interest Percentage and Indirect Ownership Interest Percentage\n\nDivision 4—Location of Entities and Permanent Establishments\n\n40 Location of an Entity that is not a Flow‑through Entity\n\n41 Location of an Entity that is a Flow‑through Entity\n\n42 Location of a Permanent Establishment\n\n43 Dual‑located entities\n\n44 Change of location during a Fiscal Year\n\n \n\n![Commonwealth Coat of Arms of Australia](image.002.png)\n\n \n\n \n\nTaxation (Multinational—Global and Domestic Minimum Tax) Act 2024\n\nNo. 132, 2024\n\n \n\n \n\n \n\nAn Act to implement a multinational top‑up tax, and for related purposes\n\n[Assented to 10 December 2024]\n\nThe Parliament of Australia enacts:\n\nPart 1—Preliminary\n\n \n\n1  Short title\n\n  This Act is the Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024.\n\nNote: Under section 356‑20 in Schedule 1 to the Taxation Administration Act 1953, the Commissioner of Taxation has the general administration of this Act.\n\n2  Commencement\n\n (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.\n\n \n\n- Commencement information\n- Column 1 Column 2 Column 3\n- Provisions Commencement Date/Details\n- 1. The whole of this Act The day after this Act receives the Royal Assent. 11 December 2024\n\n\nNote: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.\n\n (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.\n\n3  Interpreting this Act\n\n (1) Interpret this Act in a manner consistent with the following:\n\n (a) the GloBE Rules;\n\n (b) the Commentary;\n\n (c) Agreed Administrative Guidance;\n\n (d) Safe Harbours and Penalty Relief: Global Anti‑Base Erosion Rules (Pillar Two) published by the OECD on 20 December 2022;\n\n (e) a document, or part of a document, prescribed by the Rules for the purposes of this paragraph.\n\n (2) However, for the purposes of subsection (1), disregard a document, or part of a document, prescribed by the Rules for the purposes of this subsection, to the extent prescribed by the Rules.\n\n (3) Subsection (1) does not affect the application of section 15AB of the Acts Interpretation Act 1901 for the purposes of interpreting this Act.\n\n (4) In this Act:\n\nAgreed Administrative Guidance means:\n\n (a) Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two) published by the OECD on 2 February 2023; and\n\n (b) Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), July 2023, published by the OECD on 17 July 2023; and\n\n (c) Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), December 2023, published by the OECD on 18 December 2023; and\n\n (d) Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti‑Base Erosion Model Rules (Pillar Two), June 2024, published by the OECD on 17 June 2024; and\n\n (e) any other Agreed Administrative Guidance (within the meaning of the GloBE Rules).\n\nCommentary means Tax Challenges Arising from the Digitalisation of the Economy – Commentary to the Global Anti‑Base Erosion Model Rules (Pillar Two) published by the OECD on 14 March 2022, as amended from time to time.\n\nGloBE Rules means Tax Challenges Arising from the Digitalisation of the Economy – Global Anti‑Base Erosion Model Rules (Pillar Two) published by the OECD on 20 December 2021.\n\n (5) A reference in this Act to this Act (other than in this subsection, section 28 and Part 4) includes a reference to the Rules.\n\n4  Geographical application of this Act\n\n (1) This Act extends to every external Territory.\n\n (2) This Act extends to acts, omissions, matters and things outside Australia.\n\n5  Application of this Act to Fiscal Years\n\n (1) This Act applies in relation to Fiscal Years starting on or after 1 January 2024.\n\n (2) Despite subsection (1), subsection 10(1) (Australian UTPR Tax) applies in relation to Fiscal Years starting on or after 1 January 2025.\n\nPart 2—Liability\n\nDivision 1—Australian IIR tax (income inclusion rule tax)\n\n6  Liability to tax—Australian IIR tax\n\n (1) Tax is payable by an Entity for a Fiscal Year if it has one or more IIR Top‑up Tax Amounts for the Fiscal Year.\n\n (2) The amount of tax payable by the Entity for the Fiscal Year is the sum of those IIR Top‑up Tax Amounts.\n\n7  Meaning of IIR Top‑up Tax Amount\n\n (1) IIR Top‑up Tax Amount has the meaning given by the Rules.\n\n (2) Without limiting the scope of subsection (1), the Rules may provide that an Entity has an IIR Top‑up Tax Amount in respect of:\n\n (a) another Entity; or\n\n (b) a Permanent Establishment.\n\nDivision 2—Australian DMT tax (domestic minimum top‑up tax)\n\n8  Liability to tax—Australian DMT tax\n\n (1) Tax is payable by an Entity for a Fiscal Year if it has one or more Domestic Top‑up Tax Amounts for the Fiscal Year.\n\n (2) The amount of tax payable by the Entity for the Fiscal Year is the sum of those Domestic Top‑up Tax Amounts.\n\n9  Meaning of Domestic Top‑up Tax Amount\n\n (1) Domestic Top‑up Tax Amount has the meaning given by the Rules.\n\n (2) Without limiting the scope of subsection (1), the Rules may provide that an Entity has a Domestic Top‑up Tax Amount in respect of:\n\n (a) another Entity; or\n\n (b) a Permanent Establishment.\n\nDivision 3—Australian UTPR tax (undertaxed profits rule tax)\n\n10  Liability to tax—Australian UTPR tax\n\n (1) Tax is payable by an Entity for a Fiscal Year if it has one or more UTPR Top‑up Tax Amounts for the Fiscal Year.\n\n (2) The amount of tax payable by the Entity for the Fiscal Year is the sum of those UTPR Top‑up Tax Amounts.\n\n11  Meaning of UTPR Top‑up Tax Amount\n\n (1) UTPR Top‑up Tax Amount has the meaning given by the Rules.\n\n (2) Without limiting the scope of subsection (1), the Rules may provide that an Entity has a UTPR Top‑up Tax Amount in respect of:\n\n (a) another Entity; or\n\n (b) a Permanent Establishment.\n\nPart 3—Core Group and Entity concepts\n\nDivision 1—Groups, Entities and Permanent Establishments\n\n12  Meaning of Applicable MNE Group\n\n (1) An MNE Group is an Applicable MNE Group for a Fiscal Year (the test year) if:\n\n (a) for at least 2 of the 4 Fiscal Years immediately preceding the test year, the MNE Group’s annual revenue is equal to or greater than its GloBE Threshold for the Fiscal Year; or\n\n (b) if the Rules specify conditions for the purposes of this paragraph—those conditions are met.\n\n (2) For the purposes of paragraph (1)(a), the annual revenue of an MNE Group for a Fiscal Year preceding the test year is the amount shown in the Consolidated Financial Statements for that Fiscal Year of the Ultimate Parent Entity of the MNE Group as the annual revenue of the MNE Group.\n\n (3) The GloBE Threshold of an MNE Group for a Fiscal Year is:\n\n (a) if paragraph (b) does not apply—750 million Euros; or\n\n (b) if the Fiscal Year of the MNE Group is a period other than 12 months—the amount of Euros computed as follows:\n\n (i) first, divide the period of the Fiscal Year (expressed in months) by 12;\n\n (ii) next, multiply the result of subparagraph (i) by 750 million.\n\n (4) In computing an amount of Euros for the purposes of subsection (3), translate amounts expressed in currencies other than Euros to Euros in accordance with Rules made for the purposes of this subsection.\n\n13  Meanings of Entity and Ultimate Parent Entity\n\n (1) Entity means:\n\n (a) any legal person (other than a natural person); or\n\n (b) an arrangement that is required to prepare separate financial accounts, such as a partnership or trust.\n\n (2) However, none of the following is an Entity:\n\n (a) the Commonwealth;\n\n (b) a State or Territory;\n\n (c) the government of a foreign country or of part of a foreign country;\n\n (d) an authority of a government covered by paragraph (a), (b) or (c) that carries out government functions.\n\n (3) Ultimate Parent Entity means:\n\n (a) an Entity:\n\n (i) that holds a Controlling Interest in another Entity; and\n\n (ii) in which a Controlling Interest is not held by another Entity; or\n\n (b) an Ultimate Parent Entity under paragraph 18(4)(c).\n\nNote 1: See subsection 18(4) for a situation where the Main Entity in respect of one or more Permanent Establishments may be the Ultimate Parent Entity of a Group.\n\nNote 2: For the purposes of subsection (3) of this section, a Governmental Entity that meets the criterion in subparagraph 21(1)(b)(ii) (a sovereign wealth fund) is treated as not being an Entity: see subsection 21(2).\n\n14  Meanings of MNE Group and Group\n\n (1) An MNE Group is a Group that includes at least one Entity or Permanent Establishment that is not located in the jurisdiction of the Ultimate Parent Entity of the Group.\n\n (2) Group means:\n\n (a) a Group under subsection 17(1); or\n\n (b) a Group under paragraph 18(4)(a).\n\nNote: A Group under paragraph 18(4)(a) is an MNE Group.\n\n15  Meaning of Group Entity\n\n  A Group Entity of a Group means:\n\n (a) in the case of a Group under subsection 17(1)—a Group Entity of the Group under subsection 17(3); or\n\n (b) in the case of a Group under paragraph 18(4)(a)—a Group Entity of the Group under that paragraph.\n\n16  Meaning of Constituent Entity\n\n (1) A Constituent Entity of a Group means:\n\n (a) in the case of a Group under subsection 17(1)—a Constituent Entity of the Group under subsection 17(4) or 18(3); or\n\n (b) in the case of a Group under paragraph 18(4)(a)—a Constituent Entity of the Group under paragraph 18(4)(b); or\n\n (c) an Entity, or a part of an Entity, prescribed by the Rules for the purposes of this paragraph.\n\n (2) Despite subsection (1), subsections 17(4) and 18(3), and paragraph 18(4)(b), an Entity, or a part of an Entity, prescribed by the Rules for the purposes of this subsection is not a Constituent Entity of the Group.\n\n17  Groups—general structure\n\n (1) A Group under this subsection is comprised of:\n\n (a) an Ultimate Parent Entity; and\n\n (b) one or more other Entities, each of which is related through ownership or control such that the assets, liabilities, income, expenses and cash flows of the Entity:\n\n (i) are included in the Consolidated Financial Statements of the Ultimate Parent Entity; or\n\n (ii) are excluded from the Consolidated Financial Statements of the Ultimate Parent Entity solely on size or materiality grounds, or on the grounds that the Entity is held for sale.\n\n (2) The Ultimate Parent Entity mentioned in paragraph (1)(a) is the Ultimate Parent Entity of the Group.\n\n (3) Each Entity mentioned in paragraphs (1)(a) and (b) is a Group Entity of the Group.\n\n (4) Each Group Entity of the Group that is not an Excluded Entity is a Constituent Entity of the Group.\n\n18  Groups—structure with Permanent Establishment\n\n (1) This section applies if an Entity that is located in a jurisdiction is a Main Entity in respect of one or more Permanent Establishments that are located in other jurisdictions.\n\n (2) For the purposes of this Act:\n\n (a) each of those Permanent Establishments is taken to be separate from the Main Entity and from each other; and\n\n (b) the Main Entity is taken to hold a Controlling Interest in each of those Permanent Establishments.\n\nNote: The Main Entity is taken to hold a Direct Ownership Interest in each of those Permanent Establishments: see subsection 38(4).\n\n (3) If the Entity is a Group Entity of a Group under subsection 17(1) and is not an Excluded Entity, the Main Entity and each of those Permanent Establishments is a Constituent Entity of the Group.\n\n (4) If the Entity is not a Group Entity of a Group under subsection 17(1):\n\n (a) the Entity is a Group under this paragraph and a Group Entity of the Group; and\n\n (b) where the Entity is not an Excluded Entity—the Main Entity and each of those Permanent Establishments is a Constituent Entity of the Group; and\n\n (c) the Main Entity is the Ultimate Parent Entity of the Group.\n\nNote: For the purposes of this section, a Governmental Entity that meets the criterion in subparagraph 21(1)(b)(ii) (a sovereign wealth fund) is treated as not being an Entity: see subsection 21(2).\n\n19  Meanings of Permanent Establishment and Main Entity\n\n (1) Permanent Establishment means:\n\n (a) a place of business (including a deemed place of business) that is situated in a jurisdiction and treated as a permanent establishment in accordance with an applicable Tax Treaty in force, if the jurisdiction taxes the income attributable to it in accordance with a provision similar to Article 7 of the OECD Model Tax Convention; or\n\n (b) if there is no applicable Tax Treaty in force—a place of business (including a deemed place of business) in respect of which a jurisdiction taxes the income attributable to that place of business under its law on a net basis similar to the manner in which it taxes its own tax residents; or\n\n (c) if a jurisdiction has no corporate income tax system—a place of business (including a deemed place of business) that is situated in that jurisdiction and that would be treated as a permanent establishment in accordance with the OECD Model Tax Convention, if the jurisdiction would have had the right to tax the income attributable to it in accordance with Article 7 of that Convention; or\n\n (d) if paragraphs (a) to (c) do not apply—a place of business (including a deemed place of business) through which operations are conducted outside the jurisdiction where the Entity that would be the Main Entity if the place of business were a Permanent Establishment is located, if that jurisdiction exempts the income attributable to the operations conducted through the place of business.\n\n (2) Main Entity, in respect of a Permanent Establishment, is the Entity that includes the Financial Accounting Net Income or Loss of the Permanent Establishment in its financial statements.\n\nDivision 2—Excluded Entities\n\n20  Meaning of Excluded Entity\n\n (1) An Excluded Entity is an Entity that is any of the following:\n\n (a) a Governmental Entity;\n\n (b) an International Organisation;\n\n (c) a Non‑profit Organisation;\n\n (d) a Pension Fund;\n\n (e) an Investment Fund that is an Ultimate Parent Entity;\n\n (f) a Real Estate Investment Vehicle that is an Ultimate Parent Entity;\n\n (g) an Excluded Service Entity;\n\n (h) an Entity of a kind prescribed by the Rules for the purposes of this paragraph.\n\n (2) If:\n\n (a) an Entity is an Excluded Entity under a paragraph of subsection (1); and\n\n (b) the Entity is a Main Entity in respect of a Permanent Establishment;\n\nfor the purposes of this Act, treat the Permanent Establishment as an Excluded Entity under that paragraph.\n\n (3) To avoid doubt, subsection (2) does not result in the Permanent Establishment being treated as an Entity for the purposes of this Act.\n\n (4) However, an Entity is not an Excluded Entity throughout a Fiscal Year if an election under subsection (5) applies to the Entity and the Fiscal Year.\n\n (5) A Filing Constituent Entity for an Applicable MNE Group may make an election under this section that applies to a specified Constituent Entity of the MNE Group.\n\n (6) An election under subsection (5) is a Five‑Year Election.\n\n21  Meaning of Governmental Entity\n\n (1) A Governmental Entity is an Entity that meets all of the following criteria:\n\n (a) it is part of or wholly‑owned by a government (including any political subdivision or local authority thereof) of a jurisdiction;\n\n (b) it has the principal purpose of:\n\n (i) fulfilling a government function; or\n\n (ii) managing or investing that government’s or jurisdiction’s assets through the making and holding of investments, asset management, and related investment activities for those assets;\n\n (c) it does not carry on a trade or business, other than:\n\n (i) a business that only provides products or services for use by that government to fulfil a government function; or\n\n (ii) an investment business described in subparagraph (b)(ii);\n\n (d) it is accountable to that government on its overall performance, and provides annual information reporting to that government;\n\n (e) its assets vest in that government upon dissolution;\n\n (f) to the extent it distributes net earnings, the net earnings are distributed solely to that government with no portion of its net earnings inuring to the benefit of any private person.\n\n (2) For the purposes of subsection 13(3) and section 18, treat a Governmental Entity that meets the criterion in subparagraph (1)(b)(ii) of this section (a sovereign wealth fund) as not being an Entity.\n\n22  Meanings of International Organisation and Non‑profit Organisation\n\n (1) An International Organisation is any of the following:\n\n (a) an intergovernmental or supranational organisation that meets all of the following criteria:\n\n (i) it is comprised primarily of governments;\n\n (ii) it has in effect a headquarters agreement (or substantially similar agreement) with the jurisdiction in which the organisation is established (for example, an arrangement that entitles the organisation’s offices or establishments in the jurisdiction to privileges and immunities);\n\n (iii) law or its governing documents prevent its income inuring to the benefit of private persons;\n\n (b) an Entity that meets both of the following criteria:\n\n (i) it acts for, is part of, or is wholly‑owned by an organisation described in paragraph (a);\n\n (ii) law or its governing documents prevent its income inuring to the benefit of private persons.\n\n (2) A Non‑profit Organisation is an Entity that meets all of the following criteria:\n\n (a) it is established and operated in the jurisdiction where it is created and managed:\n\n (i) exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational or other similar purposes; or\n\n (ii) as a professional organisation, business league, chamber of commerce, labour organisation, agricultural or horticultural organisation, civic league or an organisation operated exclusively for the promotion of social welfare;\n\n (b) substantially all of its income from its operations as mentioned in paragraph (a) is exempt from income tax in the jurisdiction where it is created and managed;\n\n (c) it has no shareholders or members who have a proprietary or beneficial interest in its income or assets;\n\n (d) its income or assets may not be distributed to, or applied for the benefit of, a private person or non‑charitable Entity other than:\n\n (i) pursuant to the conduct of its operations as mentioned in paragraph (a); or\n\n (ii) as payment of reasonable compensation for services rendered or for the use of property or capital; or\n\n (iii) as payment representing the fair market value of property which it has purchased;\n\n (e) upon its termination, liquidation or dissolution, all of its assets must be distributed or revert to a Non‑profit Organisation or to the government (including any Governmental Entity) of the jurisdiction where it is created and managed, or any political subdivision thereof;\n\n (f) it does not carry on a trade or business that is not directly related to the purposes for which it was established.\n\n23  Meanings of Pension Fund and Pension Services Entity\n\n (1) A Pension Fund is any of the following:\n\n (a) an Entity that is established and operated in a jurisdiction exclusively or almost exclusively for the purpose of administering or providing retirement benefits and ancillary or incidental benefits to individuals, if:\n\n (i) the Entity’s establishment and operations for that purpose are regulated by that jurisdiction or one of its political subdivisions or local authorities; or\n\n (ii) those benefits are secured or otherwise protected by national regulations and funded by a pool of assets held through a fiduciary arrangement or trust to secure the fulfilment of the corresponding pension obligations against a case of insolvency of the Entity, or of other Entities together with which the Entity comprise a Group;\n\n (b) a Pension Services Entity.\n\n (2) A Pension Services Entity is an Entity that is established and operated exclusively or almost exclusively:\n\n (a) to invest funds for the benefit of Entities referred to in paragraph (1)(a); or\n\n (b) if the Entity and an Entity referred to in paragraph (1)(a) (the Pension Fund Entity), together with one or more other Entities, comprise a Group—to carry out activities that are ancillary to such of the Pension Fund Entity’s activities that are for the purpose mentioned in that paragraph.\n\n24  Meanings of Real Estate Investment Vehicle and Investment Fund\n\n (1) A Real Estate Investment Vehicle is an Entity that meets all of the following criteria:\n\n (a) taxation of the Entity achieves a single level of taxation either in its hands or the hands of the holders of the Ownership Interests in the Entity (with at most one year of deferral);\n\n (b) it holds predominantly immovable property;\n\n (c) it is widely held.\n\n (2) An Investment Fund is an Entity that meets all of the following criteria:\n\n (a) it is designed to pool assets (which may be financial and non‑financial) from a number of investors, at least some of whom are not connected;\n\n (b) it invests in accordance with a defined investment policy;\n\n (c) it allows investors to reduce transaction, research and analytical costs, or to spread risk collectively;\n\n (d) it is primarily designed to generate investment income or gains, or protect against a specific or general event or outcome;\n\n (e) its investors have a right to return from its assets or income earned on those assets, based on the contributions made by those investors;\n\n (f) it or its management is subject to a regulatory regime in the jurisdiction in which it is established or managed, including appropriate anti‑money laundering and investor protection regulations;\n\n (g) it is managed by investment fund management professionals on behalf of its investors.\n\n (3) For the purposes of paragraph (2)(a), an investor is connected to another investor if:\n\n (a) under paragraph 8 of Article 5 of the OECD Model Tax Convention, the investor is closely related to the other investor for the purposes of that Article; or\n\n (b) the investor is a spouse or de facto partner (within the meaning of the Acts Interpretation Act 1901), parent or remoter lineal ancestor, child or remoter issue, or sibling of the other investor.\n\n (4) For the purposes of paragraph (3)(b):\n\n (a) without limiting who is a child of another person, a person is the child of another person if the person is a child of the other person within the meaning of the Family Law Act 1975; and\n\n (b) without limiting who is a parent of another person, a person is the parent of another person if the other person is the person’s child because of paragraph (a); and\n\n (c) if one person is the child of another person because of paragraph (a), relationships traced to or through that person are to be determined on the basis that the person is the child of the other person.\n\n25  Meaning of Excluded Service Entity\n\n  An Entity is an Excluded Service Entity if:\n\n (a) at least 95% of the value of the Entity is owned (directly or through a chain of Excluded Entities) by one or more of the following (other than a Pension Services Entity):\n\n (i) an Excluded Entity under paragraph 20(1)(a), (b), (c), (d), (e) or (f);\n\n (ii) if the Entity is an Ultimate Parent Entity—an Investment Fund or a Real Estate Investment Vehicle; and\n\n (b) any of the following conditions are satisfied:\n\n (i) the Entity operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the Entities mentioned in paragraph (a);\n\n (ii) the Entity only carries out activities that are ancillary to those carried out by the Entities mentioned in paragraph (a).\n\nDivision 3—Joint Ventures and Multi‑Parented MNE Groups\n\n26  Joint Ventures\n\n (1) An Entity is a Joint Venture of an MNE Group if:\n\n (a) the Entity’s financial results are reported under the equity method in the Consolidated Financial Statements of the Ultimate Parent Entity of the MNE Group for the Fiscal Year; and\n\n (b) the Ultimate Parent Entity’s Ownership Interest Percentage in the Entity is at least 50%.\n\n (2) However, the Entity is not a Joint Venture of an MNE Group if any of the following applies:\n\n (a) the Entity is the Ultimate Parent Entity of an Applicable MNE Group;\n\n (b) the Entity is an Excluded Entity under paragraph 20(1)(a), (b), (c), (d), (e) or (f);\n\n (c) in a case where the Group Entities of the MNE Group that hold Direct Ownership Interests in the Entity (the Excluded Entity owners) are Excluded Entities mentioned in paragraph (b) of this subsection—any of the following applies:\n\n (i) the Entity operates exclusively or almost exclusively to hold assets or invest funds for the benefit of the holders of Direct Ownership Interests in the Entity;\n\n (ii) the Entity only carries out activities that are ancillary to those carried out by the Excluded Entity owners;\n\n (iii) the Entity is of a kind prescribed by the Rules for the purposes of this subparagraph;\n\n (d) the MNE Group is comprised exclusively of Excluded Entities;\n\n (e) the Entity is a JV Subsidiary of a Joint Venture.\n\n27  Meanings of JV Group and JV Subsidiary\n\n (1) JV Group means a Joint Venture of an MNE Group and its JV Subsidiaries.\n\n (2) JV Subsidiary, of a Joint Venture of an MNE Group, means an Entity whose assets, liabilities, income, expenses and cash flows are consolidated by the Joint Venture under an Acceptable Financial Accounting Standard (or would have been consolidated had it been required to consolidate such items in accordance with an Acceptable Financial Accounting Standard).\n\n (3) If the Main Entity in respect of a Permanent Establishment is a Joint Venture of an MNE Group or a JV Subsidiary of a Joint Venture of an MNE Group, the Permanent Establishment is a JV Subsidiary of the Joint Venture.\n\n28  Multi‑Parented MNE Groups\n\n (1) The Rules may set out the manner in which this Act applies in relation to a Multi‑Parented MNE Group.\n\n (2) To the extent that there is any inconsistency between this Act and Rules made for the purposes of subsection (1), this Act applies subject to those Rules.\n\n (3) The Rules may make provision as mentioned in subsection (1) only to the extent that doing so is consistent with the documents mentioned in subsection 3(1).\n\nPart 4—Rules\n\n \n\n29  The Rules—general\n\n (1) The Minister may, by legislative instrument, make Rules prescribing matters:\n\n (a) required or permitted by this Act to be prescribed by the Rules; or\n\n (b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.\n\n (2) To avoid doubt, the Rules may not do the following:\n\n (a) create an offence or civil penalty;\n\n (b) provide powers of:\n\n (i) arrest or detention; or\n\n (ii) entry, search or seizure;\n\n (c) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act.\n\n30  The Rules—conferral of powers and functions\n\n (1) The Rules may confer on a person or body any of the following powers or functions:\n\n (a) a power to determine, or a function of determining, any matter that may be dealt with by the Rules;\n\n (b) a power or function relating to the operation, application or administration of the Rules.\n\n (2) If the Rules confer on a person or body a power or function, the Rules may:\n\n (a) provide that the power is to be exercised, or the function performed, by legislative instrument or notifiable instrument; and\n\n (b) provide for the person or body to delegate the power or function.\n\n (3) Despite subsection (2), the Rules must not:\n\n (a) confer a power to make a legislative instrument on a person other than the Minister; or\n\n (b) confer a power to make a notifiable instrument on a person other than:\n\n (i) the Minister; or\n\n (ii) the Secretary of the Department; or\n\n (iii) the Commissioner of Taxation; or\n\n (c) confer a power to delegate a power to make a legislative instrument; or\n\n (d) confer a power to delegate a power to make a notifiable instrument to a person other than:\n\n (i) the Secretary of the Department; or\n\n (ii) the Commissioner of Taxation; or\n\n (iii) an SES employee or acting SES employee in the Department; or\n\n (iv) an SES employee or acting SES employee of the Australian Taxation Office.\n\n (4) The Rules may:\n\n (a) make provision in relation to a matter in a way that depends on the exercise of a discretion by a person; and\n\n (b) specify matters that the person must or may take into account, or not take into account, in exercising that discretion; and\n\n (c) specify the manner in which the person is to exercise the discretion; and\n\n (d) confer a power on the person to delegate the power to exercise the discretion; and\n\n (e) require the person to whom the power is delegated to comply with any written directions of the person who delegated the power; and\n\n (f) provide that a person who is dissatisfied with a decision to exercise (or not exercise) the discretion may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.\n\n (5) Despite paragraph (4)(d), the Rules must not provide for a person to delegate a power to exercise the discretion mentioned in that paragraph on a person other than:\n\n (a) the Secretary of the Department; or\n\n (b) an SES employee or acting SES employee in the Department.\n\n (6) Paragraph (4)(d) and subsection (5) apply subject to section 8 of the Taxation Administration Act 1953.\n\nNote: Section 8 of the Taxation Administration Act 1953 contains the Commissioner of Taxation’s delegation power.\n\n31  The Rules—incorporation by reference\n\n (1) The Rules may make provision in relation to a matter by applying, adopting or incorporating (with or without modification) any matter contained in any other instrument or writing:\n\n (a) as in force or existing at a particular time; or\n\n (b) as in force or existing from time to time.\n\nNote: Section 33 contains some examples of how the Rules may make such provision.\n\n (2) Subsection (1) has effect despite subsection 14(2) of the Legislation Act 2003.\n\n (3) The Rules may make provision as mentioned in subsection (1) only to the extent that doing so is consistent with the documents mentioned in subsection 3(1).\n\n32  The Rules—retrospective application\n\n  Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act 2003 does not apply in relation to:\n\n (a) the Rules; and\n\n (b) legislative instruments made under a power conferred by the Rules.\n\n33  The Rules—miscellaneous\n\n (1) Without limiting the scope of the other sections of this Part, the Rules may:\n\n (a) make provision in respect of a matter regardless of whether it relates to Australia; and\n\n (b) make provision in respect of a matter by reference to the effects of a foreign legal system; and\n\n (c) make provision in respect of a matter by reference to the contents of an instrument or publication of an International Organisation; and\n\n (d) make provision in respect of a matter by reference to the operation of any of the following:\n\n (i) accounting standards (whether Australian or otherwise);\n\n (ii) financial reporting standards (whether Australian or otherwise);\n\n (iii) generally accepted accounting principles (whether Australian or otherwise); and\n\n (e) make provision in respect of the translation of amounts:\n\n (i) to or from Australian currency; and\n\n (ii) to or from one foreign currency to another foreign currency; and\n\n (f) make provision for the making of a Five‑Year Election, Annual Election or other election by an Entity or Constituent Entity; and\n\n (g) make provision in respect of a matter by reference to the contents of such an election; and\n\n (h) make provision for the use of approved forms; and\n\n (i) make provision in respect of an amount even if the amount is zero or a negative amount; and\n\n (j) make provision by reference to deemed matters, including (but not limited to) the following:\n\n (i) groups that are deemed to be, or not to be, Groups or MNE Groups;\n\n (ii) entities that are deemed to be, or not to be, Entities, Group Entities or Constituent Entities;\n\n  for any purpose related to the Rules; and\n\n (k) make provision with respect to transitional, application and savings matters arising from the making of the Rules or amendments to the Rules.\n\n (2) To avoid doubt, the paragraphs of subsection (1) do not limit each other.\n\nPart 5—Interpretation\n\nDivision 1—Definitions\n\n34  Definitions\n\n  In this Act:\n\nAcceptable Financial Accounting Standard means any of the following:\n\n (a) an accounting standard (within the meaning of the Corporations Act 2001);\n\n (b) the IFRS;\n\n (c) the generally accepted accounting principles of any of the following:\n\n (i) Brazil;\n\n (ii) Canada;\n\n (iii) Member States of the European Union;\n\n (iv) Member States of the European Economic Area;\n\n (v) Hong Kong (China);\n\n (vi) Japan;\n\n (vii) Mexico;\n\n (viii) New Zealand;\n\n (ix) the People’s Republic of China;\n\n (x) the Republic of India;\n\n (xi) the Republic of Korea;\n\n (xii) Singapore;\n\n (xiii) Switzerland;\n\n (xiv) the United Kingdom;\n\n (xv) the United States of America.\n\nAgreed Administrative Guidance: see subsection 3(4).\n\nAnnual Election: see section 37.\n\nApplicable MNE Group: see subsection 12(1).\n\nAuthorised Accounting Body means the body with legal authority in a jurisdiction to prescribe, establish or accept accounting standards for financial reporting purposes.\n\nAuthorised Financial Accounting Standard, in respect of an Entity, means a set of generally acceptable accounting principles permitted by the Authorised Accounting Body in the jurisdiction where the Entity is located.\n\nCommentary: see subsection 3(4).\n\nConsolidated Financial Statements of an Entity means:\n\n (a) if the Entity is not the Ultimate Parent Entity of a Group under paragraph 18(4)(c)—the financial statements prepared by the Entity in accordance with an Acceptable Financial Accounting Standard, in which the assets, liabilities, income, expenses and cash flows of that Entity and the Entities in which it has a Controlling Interest are presented as those of a single economic unit; or\n\n (b) if the Entity is the Ultimate Parent Entity of a Group under paragraph 18(4)(c)—the financial statements of the Entity that are prepared in accordance with an Acceptable Financial Accounting Standard; or\n\n (c) if the Entity has prepared financial statements that are not covered by paragraph (a) or (b), but would be so covered if they were prepared in accordance with an Acceptable Financial Accounting Standard—those financial statements, adjusted to prevent any Material Competitive Distortions; or\n\n (d) if the Entity has not prepared financial statements that are covered by paragraph (a), (b) or (c)—the financial statements of the Entity that would have been prepared if the Entity were required to prepare such financial statements in accordance with an Authorised Financial Accounting Standard that is:\n\n (i) an Acceptable Financial Accounting Standard; or\n\n (ii) another financial accounting standard that is adjusted to prevent any Material Competitive Distortions.\n\nConstituent Entity: see section 16.\n\nControlling Interest means an Ownership Interest in an Entity such that the holder of the Ownership Interest:\n\n (a) is required to consolidate the assets, liabilities, income, expenses and cash flows of the Entity on a line‑by‑line basis in accordance with an Acceptable Financial Accounting Standard; or\n\n (b) would have been required to consolidate the assets, liabilities, income, expenses and cash flows of the Entity on a line‑by‑line basis if the holder of the Ownership Interest had prepared Consolidated Financial Statements.\n\nNote: A Main Entity is taken to hold a Controlling Interest in its Permanent Establishments: see paragraph 18(2)(b).\n\nCovered Taxes has the meaning given by the Rules.\n\nDirect Ownership Interest: see section 38.\n\nDirect Ownership Interest Percentage: see section 39.\n\nDomestic Top‑up Tax Amount: see section 9.\n\nEntity: see section 13.\n\nExcluded Entity: see section 20.\n\nExcluded Service Entity: see section 25.\n\nFiling Constituent Entity, for an MNE Group, means a Constituent Entity of the MNE Group that files a GloBE Information Return for the MNE Group.\n\nFinancial Accounting Net Income or Loss has the meaning given by the Rules.\n\nFiscal Year means:\n\n (a) if paragraph (b) does not apply—an accounting period with respect to which the Ultimate Parent Entity of an MNE Group prepares its Consolidated Financial Statements; or\n\n (b) if paragraph (d) of the definition of Consolidated Financial Statements applies in relation to the Ultimate Parent Entity—a calendar year.\n\nFive‑Year Election: see section 36.\n\nFlow‑through Entity has the meaning given by the Rules.\n\nGloBE Information Return has the meaning given by the Income Tax Assessment Act 1997.\n\nGloBE Rules: see subsection 3(4).\n\nGloBE Threshold, for a Fiscal Year: see subsection 12(3).\n\nGovernmental Entity: see section 21.\n\nGroup: see subsection 14(2).\n\nGroup Entity: see section 15.\n\nIFRS means the International Financial Reporting Standards.\n\nIIR Top‑up Tax Amount: see section 7.\n\nIndirect Ownership Interest: see section 38.\n\nIndirect Ownership Interest Percentage: see section 39.\n\nInternational Organisation: see subsection 22(1).\n\nInvestment Fund: see section 24.\n\nJoint Venture: see section 26.\n\nJV Group: see subsection 27(1).\n\nJV Subsidiary: see subsections 27(2) and (3).\n\nMain Entity, in respect of a Permanent Establishment: see subsection 19(2).\n\nMaterial Competitive Distortion, in respect of Consolidated Financial Statements:\n\n (a) unless paragraph (b) applies—means an application of a specific principle or procedure, under the set of generally accepted accounting principles used in preparing the Consolidated Financial Statements, that results in an aggregate variation greater than 75 million Euros in a Fiscal Year as compared to the amounts that would have been determined by applying the corresponding IFRS principle or procedure; or\n\n (b) if Rules made for the purposes of this paragraph define Material Competitive Distortion—has the meaning given by the Rules.\n\nNote: Section 35 allows the Rules to provide for currency translation in respect of amounts of aggregate variation.\n\nMNE Group: see subsection 14(1).\n\nMulti‑Parented MNE Group has the meaning given by the Rules.\n\nNon‑profit Organisation: see subsection 22(2).\n\nOECD means the Organisation for Economic Cooperation and Development.\n\nOECD Model Tax Convention means the Model Tax Convention on Income and on Capital published (from time to time) by the Council of the OECD.\n\nOwnership Interest: see section 38.\n\nOwnership Interest Percentage: see section 39.\n\nPension Fund: see subsection 23(1).\n\nPension Services Entity: see subsection 23(2).\n\nPermanent Establishment: see subsection 19(1).\n\nQualified IIR has the meaning given by the Rules.\n\nReal Estate Investment Vehicle: see subsection 24(1).\n\nRules means Rules made under subsection 29(1).\n\nSecuritisation Entity has the meaning given by the Rules.\n\nStateless Constituent Entity: see subsections 41(3), 42(3) and 43(2).\n\nTax Treaty means an agreement for the avoidance of double taxation with respect to taxes on income and on capital.\n\nthis Act: see subsection 3(5).\n\nUltimate Parent Entity: see subsection 13(3) and paragraph 18(4)(c).\n\nUTPR Top‑up Tax Amount: see section 11.\n\n35  Currency translation of aggregate variation—definition of Material Competitive Distortion\n\n  In computing an amount of Euros for the purposes of computing an aggregate variation mentioned in paragraph (a) of the definition of Material Competitive Distortion in section 34, translate amounts expressed in currencies other than Euros to Euros in accordance with Rules made for the purposes of this section.\n\nDivision 2—Elections\n\n36  Five‑Year Elections\n\n (1) This section applies if a provision of this Act permits a Filing Constituent Entity for an Applicable MNE Group to make a Five‑Year Election.\n\n (2) Unless the election is revoked, it applies to:\n\n (a) the Fiscal Year for which the GloBE Information Return for the Applicable MNE Group that records or evidences the election is filed by the Filing Constituent Entity; and\n\n (b) each subsequent Fiscal Year.\n\n (3) Unless the provision mentioned in subsection (1) otherwise provides, a Filing Constituent Entity for the MNE Group may revoke the election.\n\n (4) If the Filing Constituent Entity revokes the election, the election does not apply to:\n\n (a) the Fiscal Year for which the GloBE Information Return for the Applicable MNE Group that records or evidences the revocation is filed by the Filing Constituent Entity; and\n\n (b) each subsequent Fiscal Year.\n\n (5) However, the Filing Constituent Entity cannot revoke the election if doing so would result in the election not applying to:\n\n (a) the Fiscal Year mentioned in paragraph (2)(a); or\n\n (b) any of the subsequent 4 Fiscal Years.\n\n (6) If the Filing Constituent Entity revokes the election, a Filing Constituent Entity for the MNE Group cannot make another election under the provision mentioned in subsection (1) that applies to:\n\n (a) the Fiscal Year mentioned in paragraph (4)(a); or\n\n (b) any of the subsequent 4 Fiscal Years.\n\n37  Annual Elections\n\n (1) This section applies if a provision of this Act permits a Filing Constituent Entity for an Applicable MNE Group to make an Annual Election.\n\n (2) Unless the election is revoked, it applies to the Fiscal Year for which the GloBE Information Return for the Applicable MNE Group that records or evidences the election is filed by the Filing Constituent Entity.\n\nDivision 3—Ownership Interests and Ownership Interest Percentages\n\n38  Meanings of Ownership Interest, Direct Ownership Interest and Indirect Ownership Interest\n\n (1) An Ownership Interest in an Entity or in a Permanent Establishment is:\n\n (a) a Direct Ownership Interest in the Entity or Permanent Establishment; or\n\n (b) an Indirect Ownership Interest in the Entity or Permanent Establishment.\n\n (2) A Direct Ownership Interest in an Entity is an interest (whether by way of shares, other security or otherwise) that:\n\n (a) carries rights to a share of the profits, capital or reserves of the Entity (whether on the making of a distribution of profits, winding up or otherwise); and\n\n (b) would be classified as equity under the financial accounting standard used in the preparation of the relevant Consolidated Financial Statements (disregarding any requirement in those Consolidated Financial Statements to consolidate the assets, liabilities, income, expenses and cash flows of the Entity).\n\n (3) However, an interest is not a Direct Ownership Interest in an Entity if it is of a kind prescribed by the Rules.\n\n (4) The Main Entity in respect of a Permanent Establishment is taken to hold a Direct Ownership Interest in the Permanent Establishment.\n\nNote: The Main Entity’s Direct Ownership Interest Percentage in the Permanent Establishment is 100%: see subsection 39(7).\n\n (5) An Entity (the first entity) holds an Indirect Ownership Interest in another Entity or a Permanent Establishment (the other entity/PE) if the first entity holds a Direct Ownership Interest in:\n\n (a) another Entity that holds a Direct Ownership Interest in the other entity/PE; or\n\n (b) another Entity that holds an Indirect Ownership Interest in the other entity/PE under one or more other applications of this subsection.\n\n39  Meanings of Ownership Interest Percentage, Direct Ownership Interest Percentage and Indirect Ownership Interest Percentage\n\n (1) The Ownership Interest Percentage of an Entity (the holding entity) in another Entity (the test entity) is equal to the sum of:\n\n (a) the holding entity’s Direct Ownership Interest Percentage in the test Entity; and\n\n (b) the holding entity’s Indirect Ownership Interest Percentages in the test Entity.\n\n (2) Compute the Direct Ownership Interest Percentage of an Entity (the holding entity) in another Entity (the test entity) as follows:\n\n (a) compute the following:\n\n (i) the profits of the test entity (the relevant test entity profits) to which holders of Direct Ownership Interests in the test entity are entitled;\n\n (ii) the capital of the test entity (the relevant test entity capital) to which holders of Direct Ownership Interests in the test entity are entitled;\n\n (iii) the reserves of the test entity (the relevant test entity reserves) to which holders of Direct Ownership Interests in the test entity are entitled;\n\n (b) compute the sum of the following:\n\n (i) the percentage of the relevant test entity profits to which the holding entity is entitled because of the Direct Ownership Interests that it holds in the test entity;\n\n (ii) the percentage of the relevant test entity capital to which the holding entity is entitled because of the Direct Ownership Interests that it holds in the test entity;\n\n (iii) the percentage of the relevant test entity reserves to which the holding entity is entitled because of the Direct Ownership Interests that it holds in the test entity;\n\n (c) if the test Entity issued Direct Ownership Interests that give rise to only 1 of the kinds of entitlement mentioned in subparagraphs (a)(i), (ii) and (iii)—the Direct Ownership Interest Percentage is the result of paragraph (b);\n\n (d) if the test Entity issued Direct Ownership Interests that give rise to only 2 of those kinds of entitlement—the Direct Ownership Interest Percentage is the result of paragraph (b) divided by 2;\n\n (e) if the test Entity issued Direct Ownership Interests that give rise to all 3 of those kinds of entitlement—the Direct Ownership Interest Percentage is the result of paragraph (b) divided by 3.\n\n (3) Compute the Indirect Ownership Interest Percentage of an Entity (the holding entity) in another Entity (the test entity) by multiplying:\n\n (a) the holding entity’s Direct Ownership Interest Percentage in another Entity (the intermediate entity) at that time;\n\nby:\n\n (b) the sum of:\n\n (i) the intermediate entity’s Direct Ownership Interest Percentage in the test entity; and\n\n (ii) the intermediate entity’s Indirect Ownership Interest Percentage in the test entity (as worked out under one or more other applications of this section).\n\n (4) Despite subsection (3), if there is more than one intermediate entity to which paragraph (3)(a) applies, the holding entity’s Indirect Ownership Interest Percentage in the test entity is the sum of the percentages worked out under subsection (3) in relation to each of those intermediate entities.\n\n (5) Treat a reference in this section to an Entity as being a reference to an Entity or a Permanent Establishment (unless the Entity is a holding entity mentioned in this section).\n\n (6) Subsection (7) applies if, as a result of subsection (5):\n\n (a) the holding entity mentioned in subsection (2) is the Main Entity in respect of a Permanent Establishment; and\n\n (b) the test entity mentioned in subsection (2) is the Permanent Establishment.\n\nNote: The Main Entity is taken to hold a Direct Ownership Interest in the Permanent Establishment: see subsection 38(4).\n\n (7) Despite subsection (2), treat the holding entity’s Direct Ownership Interest Percentage in the test entity as being 100%.\n\nDivision 4—Location of Entities and Permanent Establishments\n\n40  Location of an Entity that is not a Flow‑through Entity\n\n (1) This section applies to an Entity if it is not a Flow‑through Entity.\n\n (2) For the purposes of this Act, the Entity is located in the following jurisdiction:\n\n (a) if the Entity is an Australian entity (within the meaning of the Income Tax Assessment Act 1997)—Australia;\n\n (b) if, for the purposes of a law of a jurisdiction relating to national or federal Covered Taxes, the Entity is resident in the jurisdiction based on its place of management, place of creation or a similar criterion—that jurisdiction;\n\n (c) if paragraphs (a) and (b) do not apply—the jurisdiction in which the Entity was created.\n\nNote: If, under this section, the Entity is located in more than one jurisdiction for a Fiscal Year, see section 43.\n\n41  Location of an Entity that is a Flow‑through Entity\n\n (1) This section applies to an Entity if it is a Flow‑through Entity.\n\n (2) For the purposes of this Act, the Entity is located in the jurisdiction in which the Entity was created if:\n\n (a) the Entity is an Ultimate Parent Entity; or\n\n (b) the Entity is required to apply a Qualified IIR.\n\n (3) For the purposes of this Act, if:\n\n (a) subsection (2) does not apply to the Entity; and\n\n (b) the Entity is a Constituent Entity of an MNE Group;\n\nthe Entity is a Stateless Constituent Entity of the MNE Group.\n\n42  Location of a Permanent Establishment\n\n (1) This section applies to a Constituent Entity of an MNE Group if it is a Permanent Establishment.\n\n (2) For the purposes of this Act, if paragraph 19(1)(a), (b) or (c) applies in relation to the Permanent Establishment, the Permanent Establishment is located in the jurisdiction mentioned in that paragraph.\n\n (3) For the purposes of this Act, if paragraph 19(1)(d) applies in relation to the Permanent Establishment, the Permanent Establishment is a Stateless Constituent Entity of the MNE Group.\n\n43  Dual‑located entities\n\n (1) Subsection (2) applies if a Constituent Entity of an MNE Group would be located in more than one jurisdiction under section 40 for a Fiscal Year, disregarding this section.\n\n (2) For the purposes of this Act, and despite section 40:\n\n (a) if paragraph (b) of this subsection does not apply—the Constituent Entity is taken to be located, for the Fiscal Year, in the jurisdiction worked out in accordance with the Rules; or\n\n (b) if the Constituent Entity is not taken under the Rules to be located in a jurisdiction for the Fiscal Year:\n\n (i) the Constituent Entity is taken not to be located in any jurisdiction for the Fiscal Year; and\n\n (ii) the Constituent Entity is a Stateless Constituent Entity of the MNE Group.\n\n (3) For the purposes of subsection (2), the Rules may specify a method for determining the jurisdiction in which a Constituent Entity mentioned in subsection (1) is taken to be located for a Fiscal Year.\n\n44  Change of location during a Fiscal Year\n\n  If the location of an Entity changes during a Fiscal Year, treat the Entity as being located, for the Fiscal Year, in the jurisdiction in which it was located at the beginning of the Fiscal Year.\n\n \n\n \n\n \n\n \n\n[Minister’s second reading speech made in—\n\nHouse of Representatives on 4 July 2024\n\nSenate on 22 August 2024]\n\n \n\n(87/24)\n\n \n","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"flash_summary":{"complexity_score":8,"scope_assessment":{"changed":false,"description":"The Act expressly adopts and is to be interpreted consistently with the OECD GloBE Rules and related Commentary/Guidance (s 3(1), s 3(4)), and so implements the Pillar Two top‑up tax architecture it cites. The Act itself does not on its face narrow that model; however, it delegates substantial detail and some application choices to the Rules (Part 4, ss 29–33), meaning the Ministerial Rules can define specific scope, exclusions and methods within the Act’s framework."},"complexity_factors":["Incorporation of external OECD instruments and guidance as primary interpretive material (s 3(1), s 3(4)).","Extensive delegated rule‑making power granted to the Minister, including conferral of discretionary functions and powers to other persons/bodies (ss 29, 30(1)–(4)).","Rules may incorporate or adopt external instruments by reference and apply foreign legal/technical material (s 31, s 33(1)(b),(c),(d)).","Multiple overlapping top‑up tax regimes (IIR, DMT, UTPR) whose amounts are defined by the Rules rather than fully in the Act (ss 6–11, ss 7, 9, 11).","Dense entity and group architecture with many cross‑references (Applicable MNE Group, Group, Constituent Entity, Ultimate Parent Entity) and a revenue threshold test (ss 12–19, s 34 definitions).","Detailed ownership interest and percentage mechanics requiring multi‑step calculations across chains of entities (ss 38–39).","Complex location and permanent establishment rules, including stateless and dual‑location outcomes (ss 19, 40–44).","Multiple narrow exclusions and specialised entity types (Governmental Entity, International Organisation, Non‑profit, Pension Fund, Investment/RE vehicles, Excluded Service Entity) creating many exemption pathways (ss 20–25).","Election regimes with multi‑year constraints (Five‑Year and Annual Elections) that affect status and application (ss 36–37).","Accounting interactions and an explicit Material Competitive Distortion threshold tied to consolidated financial statements and currency translation (s 34 Acceptable Financial Accounting Standard, Material Competitive Distortion; s 35)."],"plain_english_summary":"This Act implements a multinational top‑up tax aligned with the OECD Pillar Two (GloBE) framework, requiring certain multinational groups to pay extra tax where local effective tax rates fall below a global minimum. It applies to multinational enterprises meeting the revenue threshold and their constituent entities, creates new reporting and payment obligations, and delegates detailed calculations, exclusions and procedures to Ministerial Rules that incorporate OECD guidance."},"kimi_summary":{"content_quality":"ok","complexity_score":9,"scope_assessment":{"changed":false,"description":"The legislation appears consistent with its original stated purpose of implementing the OECD's Pillar Two global minimum tax framework. The Act establishes the domestic legal architecture (the 'enabling statute') while delegating technical implementation to subordinate Rules, which is a deliberate design choice to maintain flexibility with evolving international standards rather than scope creep. The three-tax structure (IIR, DMT, UTPR) aligns precisely with the OECD's recommended approach."},"complexity_factors":["Heavy reliance on delegated legislation: Most substantive tax calculation rules (IIR Top-up Tax Amount, Domestic Top-up Tax Amount, UTPR Top-up Tax Amount, Financial Accounting Net Income or Loss, Covered Taxes, Flow-through Entity definitions) are defined in 'Rules' made by the Minister rather than in the Act itself","Extensive incorporation by reference: The Act incorporates OECD documents including the GloBE Rules (December 2021), Commentary (March 2022), four sets of Agreed Administrative Guidance (February 2023, July 2023, December 2023, June 2024), and Safe Harbours documentation (December 2022) — all as living documents that can be amended","Complex entity classification system: 47+ defined terms in section 34 alone, including intricate definitions for Excluded Entities (Governmental Entities, International Organisations, Non-profit Organisations, Pension Funds, Investment Funds, Real Estate Investment Vehicles, Excluded Service Entities) each with multi-factor tests","Sophisticated ownership interest calculations: Sections 38-39 establish complex mathematical formulas for Direct and Indirect Ownership Interest Percentages involving profits, capital, and reserves entitlements, with special rules for Permanent Establishments (deemed 100% ownership)","Multi-layered jurisdictional rules: Sections 40-44 create a hierarchy for determining entity location involving flow-through entity status, dual-location conflicts, stateless constituent entities, and location changes during fiscal years","Nested conditional logic: The threshold test for Applicable MNE Groups (section 12) involves look-back periods (2 out of 4 years), currency conversion requirements, and pro-rating for non-standard fiscal years","Joint Venture and Multi-Parented Group structures: Sections 26-28 create parallel grouping concepts for joint ventures and allow Rules to modify application for multi-parented structures","Election mechanics: Complex five-year election and annual election frameworks (sections 36-37) with revocation restrictions and lock-out periods","Interaction with existing tax law: References to Income Tax Assessment Act 1997, Taxation Administration Act 1953, and Corporations Act 2001 create cross-statutory dependencies"],"plain_english_summary":"**What this law does:**\n\nThis Act implements Australia's version of the OECD's global minimum tax regime (known as \"Pillar Two\"). It ensures that very large multinational companies pay at least a 15% effective tax rate on their profits, no matter where they operate.\n\n**Who it affects:**\n\n- **Multinational enterprise (MNE) groups** with annual global revenue of **€750 million or more** (roughly AUD $1.2 billion)\n- These groups must have operations in **more than one country**\n- **Australian entities** that are part of these large multinational groups, including Australian-headquartered multinationals and Australian subsidiaries of foreign multinationals\n\n**The three taxes introduced:**\n\n1. **Australian IIR tax** (Income Inclusion Rule) — If a multinational's foreign subsidiary pays less than 15% tax overseas, the Australian parent company must pay extra tax in Australia to make up the difference.\n\n2. **Australian DMT tax** (Domestic Minimum Tax) — If an Australian entity within a large multinational group pays less than 15% effective tax rate in Australia, it must pay top-up tax here.\n\n3. **Australian UTPR tax** (Undertaxed Profits Rule) — A backstop rule starting 2025. If neither the IIR nor DMT catches low-taxed profits, other countries in the group (including Australia) can impose this tax.\n\n**Key concepts explained:**\n\n- **Constituent Entity** — Any company or business unit within the multinational group that isn't specifically excluded (like government entities, pension funds, or charities)\n- **Permanent Establishment** — A fixed place of business in another country (like a branch or office)\n- **Excluded Entities** — Government bodies, international organisations, charities, pension funds, and some investment funds are generally exempt\n\n**Why it matters:**\n\nThis law stops large multinationals from shifting profits to low-tax or no-tax jurisdictions (tax havens) to avoid paying their fair share. It aligns Australia with over 140 countries that agreed to the OECD's global minimum tax framework. The rules are detailed in separate \"Rules\" that the Minister can make, which incorporate complex international accounting and tax standards by reference.\n\n**Important timing:**\n\n- Applies to financial years starting **1 January 2024** onwards (for IIR and DMT taxes)\n- The UTPR tax applies from **1 January 2025** onwards"}},"importantCases":[],"_links":{"self":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024","history":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024/history","analysis":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024/analysis","conflicts":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024/conflicts","importantCases":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024/important-cases","documents":"/api/acts/taxation-multinational-global-and-domestic-minimum-tax-act-2024/documents"}}