Compliance
Pillar Two Compliance: What Multinationals in Australia Must Act on Now
Australian multinational enterprises face new global and domestic minimum tax rules—starting FY2024—with first returns due by 30 June 2026. Here's the full rundown and action checklist.
By NomadicTax Research Team • 5-8 min read • March 6, 2026
## Understanding Pillar Two in Australia
Australia has implemented the OECD’s **Pillar Two Global and Domestic Minimum Tax (GDMT)** regime aiming to tax multinational enterprise (MNE) groups if their effective tax rate falls below a global floor. These laws are **in force** and apply to fiscal years starting on or after **1 January 2024**([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai)). Each group needs to lodge multiple forms: the Domestic Minimum Tax Return (DMTR), Income Inclusion Rule/Undertaxed Profits Rules Return (AIUTR), a combined Global and Domestic Minimum Tax return, and the GloBE Information Return (GIR)([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai)).
## Key Deadlines & Transitional Regime
| Requirement | Effective From | Due Date |
|-------------|-----------------|------------|
| Laws enacted via Royal Assent | 10 December 2024 |—|
| Commencement of rules | FY starting 1 Jan 2024 |—|
| First returns for groups with 31 Dec year-end | FY2024 | Due 30 June 2026([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))|
During the transition, leniency applies: entities acting in **good faith** and taking **reasonable measures** may have penalties softened if noncompliance occurs before **30 June 2026**([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai)).
## Who is Affected
- MNE Groups with **€750 million or more** in revenue in at least two of the last four years, per OECD thresholds. Rules cover both Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR). The Domestic Minimum Tax (DMT) also applies.([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- Entities in **Australia** that are part of these groups must preserve record-keeping, documentation, and prepare for new reporting forms. Guidance already issued on safe harbor provisions and exemptions for eligible entities.([taxnews.ey.com](https://taxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
## Action Steps & Best Practices
**1. Establish Your Entity Mapping & Accounting Systems**
- Identify global structure and Australian presence.
- Ensure data systems can split profits, taxes, expenses by jurisdiction.
- Collect comprehensive documentation, particularly for cross-border transactions and intra-group arrangements.
**2. Determine Safe Harbor & Exemptions**
- Review if your group qualifies for Transitional CbCR Safe Harbor (TSH) if certain conditions are met.([taxnews.ey.com](https://taxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- Assess whether lodging AIUTR / DMTR is required or if exemptions apply via proposed legislative instruments.([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
**3. Monitor Legislative Instruments & Guidance**
- PCG 2025/4 outlines the ATO’s approach to penalties during the transition period.([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- Draft Legislative Instruments such as LI 2025/D17 may affect exemptions or obligations.([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
## Example Scenario: Australian Subsidiary of Global Firm
A firm headquartered in Germany generates €1.5B in global revenue. It has an Australian subsidiary. Under the new rules:
- It must prepare a GIR (global return) and combined domestic-min tax return if eligible.
- For FY2024 (year ending 31 Dec 2024), it needs to submit these filings to the ATO by **30 June 2026**.
- It should gather profit data by jurisdiction, document cross-border financing arrangements, and ensure consistency with GloBE rules.
- It should watch for any exemptions under LI 2025/D17 and consider safe harbor options to reduce compliance burden.
## Summary & Takeaways
Australia’s Pillar Two is law, applies from tax years starting 1 January 2024, with first returns due 30 June 2026 for end-December year-ends. Multinational groups need to act now:
- Prepare systems and reporting capability
- Understand exemptions & safe harbors
- Maintain clear documentation to mitigate penalties.
Complying early can reduce risk, but also yield operational benefits, more reliable reporting, and stronger tax governance frameworks.