Practice Update - January 2026

Global and Domestic Minimum Tax – New Reporting Obligations 

Australia’s implementation of the OECD Pillar Two global minimum tax introduces new reporting obligations for in-scope multinational enterprise (MNE) groups, generally those with consolidated revenue of EUR 750 million or more. 

Four new lodgment requirements apply: 

• GloBE Information Return (GIR) 

• Foreign Lodgment Notification 

• Australian IIR/UTPR Tax Return (AIUTR) 

• Australian Domestic Minimum Tax Return (DMTR) 

The ATO expects the AIUTR and DMTR to be combined into a single Combined Global and Domestic Minimum Tax Return (CGDMTR). The GIR will remain a separate, information-only return. 

While the GIR may be lodged in Australia or overseas by a nominated entity (where a qualifying agreement exists), Australian entities must still lodge local returns and submit a foreign lodgment notification. Importantly, nil returns may still be required. 

Lodgment is generally due 18 months after the first applicable income year and 15 months for later years. 

If your group may be affected, early planning is recommended. 

When a FITO applies 

To qualify for a foreign income tax offset (FITO), the tax must be a foreign income tax imposed under non-Australian law, such as tax on income, profits or gains, certain withholding taxes, or some foreign domestic minimum top-up taxes (DMT). The tax must be validly imposed under foreign law and any applicable Australian tax treaty, with only the treaty-permitted amount counting where rates are limited. The tax must be paid, or deemed paid, by the taxpayer (including tax withheld or paid on their behalf), and it must relate to income included in Australian assessable income (or your NANE income under section 23AI or 23AK) , if only part is assessable, the offset is apportioned. Refundable taxes or taxes linked to other benefits do not qualify, and the foreign income must be grossed up in the Australian tax return. 

Practice Statement (PSLA) 2005/2 updated to include record-keeping requirements for Pillar Two and penalties for not keeping records. 

The ATO has updated PSLA 2005/2 to include guidance on the record-keeping obligations for entities subject to minimum tax law, including the IIR, UTPR and DMT. Entities must now retain comprehensive records for at least eight (8) years, ensuring that all relevant transactions, elections, calculations, and determinations are clearly documented and readily accessible in English. 

Failure to comply with these record-keeping requirements may result in significant penalties. The ATO may also impose additional penalties if poor record-keeping leads to incorrect tax reporting. However, the ATO has discretion to remit penalties in cases where entities have made genuine attempts to comply, or where records were lost or destroyed due to circumstances beyond their control and have been reconstructed. 

These updates reinforce the importance of robust documentation and proactive compliance for all entities affected by the new minimum tax regime. 

ATO returns over $1 billion in unpaid super to employees 

The Australian Taxation Office (ATO) has released new data showing $1.1 billion in unpaid superannuation affecting around one million employees in 2024–25, reflecting stronger enforcement of Superannuation Guarantee (SG) obligations. During the year, the ATO raised almost $800 million in Superannuation Guarantee Charge (SGC) and over $200 million in penalties and took more than 20,000 compliance actions, including director penalty notices, garnishees and legal proceedings, supported by improved access to near real-time Single Touch Payroll and super fund data. The upcoming introduction of Payday Super is expected to enable earlier detection of missed payments and faster enforcement, helping protect employees’ retirement entitlements and keep businesses compliant. 

CARF to be implemented from 2027, first exchanges with other tax authorities in 2028 

The Australian Government has confirmed that Australia will implement the OECD Crypto-Asset Reporting Framework (CARF) from 2027, with the first information exchanges with foreign tax authorities in 2028, as announced in the Mid-Year Economic and Fiscal Outlook (MYEFO) 2025–26. Under CARF, Australian crypto-asset service providers will be required to report information to the ATO on crypto assets held by foreign tax residents and certain foreign-controlled entities. A domestic crypto tax reporting framework will also commence in 2027, with reporting from 2028, and together these measures are expected to raise AUD 170 million. Further consultation on legislation and reporting design is expected, with CRS 2.0 amendments anticipated to be implemented alongside CARF to give reporting entities time to prepare for compliance. 

Get ready for Payday Super 

Payday Super changes how and when employers pay superannuation guarantee (SG). From 1 July 2026, employers must pay super on payday, at the same time as salary and wages, rather than quarterly. SG will be calculated at 12% of qualifying earnings (QE), a Super must be received by the employee’s fund within 7 business days of payday (with limited exceptions, such as for new employees). The Superannuation Guarantee Charge (SGC) will also change, including daily compounding interest, and ATO assessment rather than self-assessment. Reporting through Single Touch Payroll will expand, and the Small Business Superannuation Clearing House will close by 30 June 2026. Employers should review payroll systems and processes now to prepare. 

If your business employs staff, Payday Super will change how you pay their super. To help you prepare, contact Lynden Group for guidance on the key changes to Super Guarantee obligations.

From 1 July 2026, anti-money laundering and counter-terrorism financing (AML/CTF) law will be extended to certain services 

From 1 July 2026, Australia’s AML/CTF laws will expand to cover more professions, including real estate agents and developers, lawyers, conveyancers, accountants, dealers in precious metals and stones, and trust and company service providers, with certain virtual asset services brought into scope from 31 March 2026. These obligations will apply only when these professions provide specified “designated services”, not merely because of their professional status. Businesses may have obligations if they provide these services and have a connection to Australia and should review their activities to assess coverage. The Australian Government released reform guidance in October 2025, with sector-specific guidance for tranche 2 entities expected in late January 2026 to support compliance readiness. 

For guidance on how these changes may affect your business, contact Lynden Group. 

Email: info@lyndengroup.com