Australia's biggest structural tax reform in a generation is now on the legislative track.

The Treasury Laws Amendment (Tax Reform No 1) Bill 2026 was introduced on 28 May. From 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation plus a 30% minimum tax on capital gains. Negative gearing on residential property is quarantined for properties acquired on or after 7.30pm AEST 12 May 2026. The Senate Economics Legislation Committee reports by 22 June.

The OECD on 28 May released the updated Consolidated Commentary to the GloBE Model Rules, merging the original March 2022 Commentary with all Agreed Administrative Guidance issued between March 2022 and January 2026. France has separately endorsed central GIR filing for the transitional period, with a lenient penalty approach where the centrally filed return is made available within six months of the filing deadline.

The ATO has confirmed it will close its DPT specialist team at the end of the 2026 financial year. PS LA 2017/2 and PCG 2018/5 have been updated to fold DPT casework back into mainstream Part IVA and TP teams. The ATO has also removed the practice of providing taxpayers with a position paper prior to issuing a DPT assessment. The signal is structural, not administrative.

Minimum equity for foreign-owned banking groups rises from 6% to 12% for groups including a domestic systemically important bank and 11% for all other groups, from 1 April 2027. FIF regime overhauled; non-resident contractors' withholding tax thresholds increased; R&D tax credit cap on internal software cut from NZD 25 million to NZD 3 million. Significant for any Australian-headquartered group with a New Zealand banking or financing platform.

This week brings two architectures into focus together. The first is the Australian tax base for individuals, trusts and partnerships, which is being rewritten through the Treasury Laws Amendment (Tax Reform No 1) Bill 2026 introduced on 28 May. The second is the international compliance scaffolding for in-scope multinational groups, which the OECD consolidated on the same day through an updated Consolidated Commentary to the GloBE Model Rules. The proximity of the two events is not coincidence. The Australian government is signalling that domestic base reform and international minimum tax compliance will be administered as a single coherent agenda over the next twelve to twenty-four months.

For multinationals operating into or out of Australia, the implications are concrete. CGT base reform reshapes exit, divestment and pre-CGT asset planning from 1 July 2027 onwards. Pillar Two compliance reaches its first operational deadline on 30 June 2026, just thirty-two days away. Layered onto that, the ATO has signalled the closure of its Diverted Profits Tax specialist team, the New Zealand government has tightened the thin capitalisation rules for foreign-owned banking groups, and Ireland has confirmed its first GIR lodgement window. Groups that triage these workstreams separately will spend the next six weeks reacting; groups that integrate them now will spend them executing.

Schedule 1 to the Treasury Laws Amendment (Tax Reform No 1) Bill 2026 replaces the 50% CGT discount for individuals, trusts and partnerships with cost base indexation, and imposes a 30% minimum tax on capital gains, with effect from 1 July 2027. The minimum tax is imposed by a companion Bill, the Income Tax Rates Amendment (Tax Reform No 1) Bill 2026. The Bill brings forward two structurally important consequences. First, gains accrued on pre-CGT assets after 1 July 2027 will be subject to tax for the first time. Gains accrued before that date remain exempt, but post-reform accruals do not. Second, for assets acquired between 1985 and 1999, the 50% discount survives only for gains accrued before 1 July 2027; the new regime applies to all gains accrued after that date. Concessions exist for new residential builds and affordable housing, where individual investors can elect between the 50% discount (60% for affordable housing) and the new rules.

What clients should do. For private clients holding pre-CGT assets, the planning window between now and 30 June 2027 is the most consequential in the regime's history. Existing valuations should be refreshed; deemed-acquisition rules will determine the indexation base from 1 July 2027. For trustees of family trusts and private investment vehicles, the interaction with attribution managed investment trusts, tax consolidated groups and residency change rules is the subject of ongoing Treasury consultation. The Senate Economics Legislation Committee reports by 22 June 2026, and Schedule 2's negative gearing quarantining is already operative for properties acquired on or after 7.30pm AEST 12 May 2026. Decisions on residential investment acquisitions must be made now against the new rules, not the old ones.

The OECD on 28 May released the updated Consolidated Commentary to the GloBE Model Rules. It merges the original March 2022 Commentary with the full body of Agreed Administrative Guidance issued through January 2026, creating a single reference text for in-scope groups preparing their first GIR. The release is a turning point: it formalises the rules as a stable interpretive framework rather than an evolving consultation. Read alongside this, France's tax authorities have endorsed central GIR filing during the transitional period, accepting that constituent entities of in-scope groups need not file a local GIR provided the centrally filed return is made available within six months of the filing deadline. A lenient penalty approach applies during the transitional period. Ireland has separately confirmed that an Irish constituent entity must file a Top-up Tax Information Return locally unless the return is filed centrally by the ultimate parent entity or a designated filing entity in another jurisdiction with an active exchange agreement; first-period deadlines have been pushed to 30 June 2026.

What clients should do. For groups with December 2024 year-ends, the 30 June 2026 first GIR deadline is now thirty-two days away. Confirm the Designated Local Entity election where multiple Australian entities are in scope; confirm the central filing election where the ultimate parent jurisdiction will lodge centrally; identify each non-Australian constituent entity's filing obligation and exchange agreement coverage. The Consolidated Commentary is the authoritative reference text for the Transitional Safe Harbour, the Substance-Based Income Exclusion and the Side-by-Side regime treatment of US GILTI/CAMT for the first filing. Groups relying on the Transitional CbCR Safe Harbour should re-run qualification using the consolidated guidance and document the conclusion in the GIR workpapers; PCG 2025/4 transitional penalty relief is scoped to good-faith first-year errors, not to documentation gaps.

The ATO has confirmed that its Diverted Profits Tax specialist team will close at the end of the 2026 financial year. PS LA 2017/2 and PCG 2018/5 have been refreshed to reflect the absorption of DPT casework into mainstream Part IVA and transfer pricing teams. Notably, the practice of providing taxpayers with a position paper prior to issuing a DPT assessment has been removed from PS LA 2017/2. The DPT was introduced in 2017 as a 40% penal tax targeting profit shifting by significant global entities outside the reach of conventional adjustment provisions. Eight years on, the ATO assesses that mainstream teams now have sufficient familiarity with DPT and its interaction with Part IVA to manage casework without a dedicated unit.

What clients should do. For Australian inbound and outbound MNEs, the practical risk profile does not reduce; it broadens. DPT remains a live integrity rule and an automatic Reportable Tax Position category. The change means DPT issues are more likely to be raised in the context of a broader Part IVA or TP review than as a discrete specialist enquiry, and the procedural protection of a pre-assessment position paper is no longer available. Groups with material royalty, management fee, intangibles migration or financing structures should ensure that DPT contemporaneous documentation is integrated with TP documentation, that the DPT “sufficient foreign tax” and “sufficient economic substance” defences are documented before, not during, an ATO engagement, and that the PCG 2024/1 intangibles arrangements risk framework is mapped onto DPT exposure. Where a Justified Trust assurance review is on the horizon, the DPT controls testing question should be reframed as part of the broader integrity-rule controls map rather than as a discrete workstream.

Pereira Consulting is an independent tax advisory practice founded by Neil Pereira, advising multinational groups on international tax operating into and out of Australia on Pillar Two readiness, transfer pricing, anti-avoidance, ATO disputes and corporate income tax compliance. Neil is a Chartered Tax Adviser, Registered Tax Agent and Solicitor.

Disclaimer. This newsletter is general information only and does not constitute tax or legal advice. It is current as at the issue date. Pereira Consulting accepts no liability for any decision made in reliance on its contents. Please contact Neil Pereira to discuss the application of these developments to your specific circumstances.