The law barely moved this week; the machinery around it did.

The ATO will terminate the large market independent review from 30 September 2026 and is consulting on a final offer arbitration pilot for protracted disputes. The first exchange of Pillar Two GloBE Information Returns between tax administrations is expected towards the end of September. A five release transparency timetable will culminate in the first public country by country reports in late October. Each of these developments changes how a position is tested rather than what the position is.

Very little happened to the substantive law this week, while a great deal happened to the machinery that sits around it. The ATO advised large market stakeholders at the Large Business Stewardship Group quarterly meeting on 13 August 2026 that the large market independent review process will cease from 30 September 2026, that a final offer arbitration pilot is being designed to address protracted disputes, that the first exchange of GloBE Information Returns between tax administrations is expected towards the end of September, and that five separate transparency publications will be released between 17 September and the end of October, ending with the first public country by country reports.

Each of those developments changes how a position is tested rather than what the position is. The independent review change alters the path a contested audit takes. The GIR exchange means the numbers a group filed in one jurisdiction become visible to other administrations in the network, including the ATO. The transparency timetable means a group's headline Australian numbers, its assurance ratings profile in aggregate and, for the first time, its country by country footprint will all be in the public domain within a six week window.

The disputes change deserves the most attention, and it is worked through first below: what is ending, what is proposed in its place, and where the strengths and the limits of the proposal sit.

The same week also brought a reminder that the trade environment remains capable of moving faster than any tax development. The United States' 50 per cent tariffs on a broad range of Canadian goods, scheduled to commence on 19 August, were paused on 18 August for three days pending finalisation of a bilateral deal. At the date of this brief the position remains open, and groups with Canadian supply into the United States have had to plan against a moving position for most of the week.

The ATO confirmed on 13 August 2026 that the large market independent review process will be terminated from 30 September 2026. The stated reasons are low uptake, with nine cases in the last five years, a view that the process is not providing effective early resolution of disputes, and that it is no longer a cost effective option for taxpayers or the ATO. The ATO also noted that every independent review completed over that period concluded that the audit position was the better view. Independent review will remain available for small businesses with turnover under $10 million; the large market process applied to taxpayers with turnover of $250 million or more, and the process will not be replaced like for like.

The process had structural limits that may explain the low uptake as much as any lack of demand. It could not be applied to transfer pricing matters or to cases involving Part IVA, which together account for a substantial share of the large market disputes that actually become protracted. For the categories of dispute it could cover, however, it was the only pre-assessment mechanism in which a reviewer outside the audit team looked at the audit position as a whole, and it was established in response to long held concerns about the independence of reviews of ATO audit positions.

What is proposed in its place is an arbitration pilot for certain medium and large market disputes. The design work is at an early stage, but the features the ATO has described are specific. The preferred model is final offer arbitration, sometimes called baseball arbitration, in which each party puts its final position and the arbitrator must select one of them in full, with no capacity to split the difference. Arbitrators would be drawn from a panel of former Federal Court judges. The ATO would decide which disputes to offer to arbitration; taxpayers would not be able to request it. And a taxpayer that accepts would give up its other statutory avenues, with the arbitral outcome final. The ATO considers the strongest candidates to be valuation and transfer pricing based disputes, particularly inbound distribution matters, and other disputes that are discrete and fact specific.

Final offer arbitration has a well understood logic: because the arbitrator cannot compromise, each party is driven towards the most moderate position it can credibly support, and ambit claims become dangerous rather than useful. For a dispute that is genuinely about quantum, a distributor margin, a royalty rate, a valuation range, that discipline can serve both sides well, and the model is consistent with the direction of Australian treaty practice. The memorandum of understanding with Canada published on the ATO website on 6 August 2026, covered in last week's brief, adopts the same final offer approach for mandatory binding arbitration of unresolved mutual agreement procedure cases under the Multilateral Convention.

The limits deserve equal attention. The proposal sits at a different point in the dispute lifecycle from what it follows: independent review operated before an assessment issued, while arbitration would operate once a dispute has crystallised, so on the design described so far the pilot would not fill the pre-assessment gap that closes on 30 September. An arbitrated outcome resolves the dispute but produces no precedent, no published reasoning of general application and no judicial guidance on the contested question, so systemic questions of law will still need to be litigated by someone. The finality mechanism also warrants careful analysis when the design emerges: statutory rights under Part IVC of the Taxation Administration Act 1953, being objection and then review in the Administrative Review Tribunal or appeal to the Federal Court, are not simply waivable in the abstract, and in practice finality of this kind is achieved through a contractual undertaking not to pursue them, so the legal footing on which an arbitral outcome would bind, and whether legislation would be needed, is an open question. And because the ATO alone decides what is offered, the pilot's coverage will reflect the ATO's selection preferences rather than taxpayer demand; controlled selection is a conventional feature of a pilot, so the question is less the design than whether the selection criteria are published and whether coverage widens if the pilot succeeds.

Two questions follow immediately and, on what has been said so far, do not yet have public answers: the treatment of independent reviews already on foot at 30 September 2026, and whether the pilot will be the subject of a consultation process before it commences. Both are worth raising with the case team where a group has an audit in train.

What clients should do. First, any group with a large market audit at or approaching the statement of audit position stage should raise timing with the case team promptly, since eligibility for independent review depends on the audit reaching that point while the mechanism remains available. Second, groups with valuation or pricing disputes that may be offered arbitration under the pilot should start treating their evidence file as the asset it will become: under a final offer model the better supported and more moderate position is generally thought to fare better, and evidence assembled after positions have hardened is worth less than evidence assembled before. Third, the finality trade should be evaluated deliberately when an offer comes, not treated as boilerplate; for a dispute that turns on a contestable question of law rather than a number, the review pathway a group would be giving up may be worth more than the speed it would be buying. Fourth, since selection sits with the ATO, a group with a discrete valuation or pricing dispute that would suit the model may wish to indicate to its case team that it would engage constructively with the pilot.

The ATO provided its first meaningful statistics on the Australian Pillar Two population on 13 August 2026. As at 11 August, close to 2,400 domestic Pillar Two lodgments had been received, along with around 230 GloBE Information Returns. The first Australian combined returns are not due until 31 December 2026 for 30 June 2025 year ends, so the current population will largely reflect registrations, notifications and early filers rather than the eventual lodging cohort, although the ATO did not break the figures down. The first exchange of GIRs between tax administrations is expected towards the end of September. The ATO also confirmed that its Pillar Two compliance approach will be risk based rather than assurance based, and will be managed outside the Justified Trust program and its processes, although some coordination with Justified Trust teams is expected for Top 100 taxpayers given the continuous engagement model that applies to them.

The GIR exchange is the item to plan around. Once exchanges begin, the GIR a group lodged in its ultimate parent's jurisdiction, or in whichever jurisdiction was designated to file, will begin reaching other administrations. Dissemination is targeted rather than whole of file, so a receiving administration would ordinarily obtain the general section together with the sections relevant to it, and the precise scope of what the ATO receives is worth confirming rather than assuming. Even on that narrower basis, the consistency of a group's Pillar Two story becomes checkable from late September: the jurisdictional data in the exchanged GIR, the group's Australian registration and notification positions, the eventual Australian combined return and the group's transitional safe harbour claims will all be capable of being read together by an administration that has so far seen only fragments.

For Australian obligations the calendar is unchanged and is set out in the deadlines table below. Groups with a 30 June 2025 year end face a 31 December 2026 date for the first GIR and the combined global and domestic minimum tax return, with the GIR notification or foreign lodgment notification made through the combined return. The risk based compliance framing does not soften those dates; it describes how the ATO will select what to examine once the data is in.

What clients should do. Reconcile now, rather than after the first query arrives. The specific exercise worth commissioning is a three way consistency check between the GIR as filed or as it will be filed offshore, the group's Australian registration and notification positions, and the data feeding the Australian combined return. Where the group relied on the transitional country by country reporting safe harbour, confirm that the CbC report underlying that claim is the same vintage and basis as the one the ATO already holds. Assign ownership of exchanged-data queries to a named person; questions arriving from late September will be easier to answer if someone is expecting them.

The ATO set out its transparency publication timetable for the remainder of 2026 on 13 August. Findings reports for the Top 100 and Top 1000 programs, together with the tax certainty and reportable tax position findings, are expected on 17 September. The ATO annual report, including updated tax gap estimates, follows between 25 September and 1 October. The Report of Entity Tax Information for 2023-24, the entity level publication of total income, taxable income and tax payable, is scheduled for 1 October, and letters asking affected taxpayers to verify their three numbers before publication are being distributed in the week beginning 17 August. Research and development transparency figures are expected on 8 October. The first public country by country reports are expected at the end of October.

The public CbC release is the novelty. The ATO noted that hundreds of public CbC reports have been lodged, that more than 100 lodgment deferral requests have been received, and that processes are being established to load the reported data onto the data.gov.au website. The ATO is considering publishing contextual information alongside the reports, and is still settling its approach to the release of subsequent tranches, notably the large population of 31 December year end groups. It also observed that the free text "approach to tax" disclosure is being completed in widely varying ways across the reports lodged so far.

The sequencing is worth noting alongside the Pillar Two section above. From late September the ATO expects to begin receiving exchanged GIR data, and from late October a group's public country by country report will be available to anyone. The two datasets cover similar ground on different bases, and they will not reconcile line for line. Groups would be well served by preparing a short internal explanation of the principal differences before either lands, rather than after the first question arrives. More broadly, between 17 September and the end of October a large Australian group's assurance ratings profile in aggregate, its headline Australian tax numbers and its global footprint by jurisdiction will all enter the public domain within about six weeks, each on a different basis and each inviting comparison with the others, and those comparisons are likely to be made whether or not they are apt.

What clients should do. Verify the three numbers when the letter arrives; the published figures are the basis of most external commentary, and correcting them after release is much harder than correcting them beforehand. For public CbC, treat the end of October as a communications date as much as a compliance one: brief the board and the communications function on what the group's report shows, identify the jurisdictions that will attract questions, and review the "approach to tax" narrative that was lodged, since it will be read alongside everyone else's and the variation the ATO has observed suggests some groups have treated it as a formality. Groups with a 31 December year end that have deferred lodgment should use the additional time to settle the approach to tax narrative and to identify the jurisdictions most likely to attract questions.

The ATO gave large market stakeholders an overview of its use of artificial intelligence on 13 August 2026. It currently operates more than 50 machine learning models, both predictive and determinative, used principally for risk profiling and fraud detection in the individuals and small business markets, and around 3,000 trained staff are using generative tools for internal work, with no autonomous agents enabled and data kept in house.

The forward program matters more for large taxpayers. The ATO expects future use in case profiling, in drafting position papers once a decision has been made, in sorting and prioritising objections, including the substantial volume of out of time objection requests, and in director penalty notice processes. Each of those sits close to the compliance functions that large groups interact with directly, and each will raise familiar questions about how a taxpayer tests reasoning that was machine assisted.

The item with the most direct planning consequence is that the ATO is considering issuing guidance on what amounts to reasonable care in the use of AI for tax compliance, for penalty purposes. New Zealand's revenue authority has addressed the same question in its guidance on the shortfall penalty for not taking reasonable care, which deals with the use of AI directly. No Australian guidance has issued, so what follows is our expectation rather than a stated ATO position: on the New Zealand approach, the use of AI in preparing returns and positions would be unlikely of itself to amount to a failure to take reasonable care, but a taxpayer would probably be expected to demonstrate human review, verification of outputs against primary sources, and controls proportionate to the stakes. Under Schedule 1 to the Taxation Administration Act 1953, a failure to take reasonable care attracts a 25 per cent base penalty on that limb, and the standard sits alongside the separate reasonably arguable position threshold that can apply to large shortfalls even where care was taken, so guidance of this kind would have immediate practical weight.

What clients should do. Get ahead of the guidance rather than waiting for it. A tax function using AI tools today, and most now are, would be well served by a short documented protocol covering which tools are used for what, where human review sits, how sources are verified before reliance, and how the use of AI is recorded on material positions. That protocol belongs in the tax governance framework alongside the existing controls, where a Justified Trust reviewer can find it. The same standard is already doing work elsewhere: Australia's transitional Pillar Two penalty relief is available where reasonable care is shown, for fiscal years beginning on or before 31 December 2026, so a group relying on that relief for its first GIR and combined return would want its protocol to cover how AI tools were used in preparing those filings. Groups that use external advisers should also understand how those advisers use AI: the safe harbour that can protect a taxpayer from a reasonable care penalty where the shortfall was caused by a registered agent depends on the taxpayer having given the agent all relevant taxation information, so the record of what was provided and when matters as much as the adviser's own controls.

United States. Treasury and the IRS released proposed regulations on 13 August 2026 (REG-103844-26) addressing section 987 foreign currency gain and loss for qualified business units of controlled foreign corporations. The package would implement the CFC exemption election foreshadowed in Notice 2026-17, permitting CFCs to opt out of computing and recognising section 987 gain or loss on their QBUs other than for certain inbound nonrecognition transactions, and the 120 month amortisation election for pretransition gain or loss from Notice 2025-72. Taxpayers may rely on the proposed rules for tax years beginning after 31 December 2024 and ending before the rules are finalised, provided they and related taxpayers apply them consistently. Australian headquartered groups with US sub-groups holding foreign currency QBUs should have the election modelled before US year end, since the opt out is a simplification with a real cost where pretransition losses would otherwise have been recognised.

United States. The Fifth Circuit has withdrawn its January 2026 opinion in Sirius Solutions, L.L.L.P. v Commissioner, 165 F.4th 374, and substituted a new opinion in the same appeal, now captioned K Alain, L.L.L.P. v Commissioner (No. 24-60240, 12 August 2026). The court now holds that a "limited partner" for the self-employment tax exception in section 1402(a)(13) means a partner who does not play a significant role in managing or running the business, so state law limited liability status is no longer sufficient on its own, and the matter returns to the Tax Court. The opinion binds only the Fifth Circuit, and companion appeals in Denham (First Circuit, where a threshold jurisdictional question may prevent the court reaching the issue) and Soroban (Second Circuit) remain pending. Australian executives holding interests in US fund and services partnerships may find the functional inquiry reaches arrangements that the prior, form based test did not.

United States and Canada. The 50 per cent tariffs on a broad range of Canadian goods under section 338 of the Tariff Act of 1930, proclaimed in three proclamations of 20 July 2026 directed at motor vehicles, dairy and alcoholic beverages together with an extensive annex of other products, were scheduled to take effect on 19 August 2026. On 18 August the United States paused the tariffs for three days, to the end of 21 August, citing a bilateral deal subject to finalisation of documents, so absent a concluded deal the duties would commence on 22 August. The exclusions cover energy products, potash, goods already subject to section 232 measures, fish, critical minerals and certain civil aircraft goods, and the duties as proclaimed would apply regardless of USMCA qualification. At the date of this brief the outcome remains open, and groups with Canadian supply into the United States should treat any planning window as short.

United States. The Commerce Department has proposed expanding the lists of steel, aluminium and copper derivative products subject to section 232 duties, with public comments accepted through 27 August 2026. Groups whose products currently sit outside the derivative lists should check the proposed additions rather than assume continuity.

United States. Congress has adjourned for the August recess with competing continuing resolutions, the Senate version funding the government to 11 December and the House version to 4 December, to be reconciled in a short September session before the 3 November mid-term elections. The Senate Budget Committee chairman's FY2027 budget resolution, released on 7 August, contains reconciliation instructions to several committees but not to the Finance Committee. For Australian headquartered groups with US operations the practical point is that no near term tax reconciliation vehicle currently exists in the Senate, so the regulatory pipeline, including the section 987 and OBBBA packages noted above and in the table below, is where the changes worth modelling are likely to come from over the next six months.

The next wave of Top 1000 reviews has begun. Following confirmation that the next wave of Top 1000 combined assurance reviews was imminent, notification letters have now started arriving. The population is a mix of taxpayers entering the program for the first time and taxpayers with no ATO review activity for four years. A review covers a four year income tax period and the last completed financial year for GST, and for some groups the most recently reviewed year is 2018 or 2019, which raises a genuine question about which years are now in scope. Groups receiving a letter should confirm the review period early and refresh evidence packs against the current guidance rather than the guidance that applied at the last review.

Board of Taxation thin capitalisation review: report due by the end of January 2027. The Board has confirmed that stakeholder meetings will occur over the coming weeks, including a session with peak bodies on 28 August 2026, with the report to be finalised by the end of January 2027. The issues being pressed include deductions denied because taxpayers cannot practically restructure or trace, tracing difficulties under the debt deduction creation rules and the third party debt test, the narrow accessibility of the third party debt test, and the interaction between transfer pricing and the new rules on the quantum of debt. Groups with concrete fact patterns still have a short window to put them forward through their representative bodies.

A red tape reduction report is with the Treasurer. The Board of Taxation has advised that its red tape reduction report, focusing on law complexity, reporting obligations, ATO systems and fringe benefits tax, has been delivered to the Treasurer. It contains 11 referrals of matters to the ATO and 10 recommendations for the Treasurer, and whether and when the report and the Government's response are released is a matter for the Treasurer. The fringe benefits tax and reporting obligation strands are the ones most likely to touch large employers, and groups with practical examples of duplicative reporting still have time to route them through their representative bodies.

Trust minimum tax: the definitional perimeter is the live design question. The 2026-27 Budget announced a 30 per cent minimum tax on discretionary trusts from 1 July 2028, applying at trustee level with a non-refundable credit for beneficiaries, and Treasury's consultation paper of 8 July 2026 closed for submissions on 31 July. The design issue now attracting sustained commentary is the definition. Because trusts are conventionally defined by exclusion from the "fixed trust" concept, and because trustees of modern commercial trusts routinely hold powers to amend, add beneficiaries or vary entitlements, a definition drawn too widely could capture unit trusts, property and infrastructure structures with multiple trust layers, financing vehicles and employee incentive trusts that do not engage in the income splitting the measure targets. Inbound groups holding Australian assets through trust structures should map which of their trusts are technically non-fixed, since that is the population at definitional risk, and should note the proposed three year restructure rollover, available from 1 July 2027, in any planning.

Edited versions of private rulings go to the NTLG on 25 August. Stakeholder concerns about how edited versions of private rulings are being amended and published, including instances said to involve further sanitisation without taxpayer consent and rulings flagged as no longer representing the ATO view at the same time as related web guidance was changed, are scheduled for discussion at the National Tax Liaison Group meeting on 25 August 2026. The underlying question is whether significant issues affecting large taxpayers should be dealt with through public rulings and other binding guidance rather than case by case. Groups that have navigated by an edited version of a private ruling in taking a position would be well served by keeping a dated copy of the version relied on, since the published text can change.

Country by country reporting exemptions guidance updated. The ATO has updated its guidance on when CbC reporting entities may be eligible for exemptions or administrative relief under the country by country reporting regime (the CbC report, master file and local file, as distinct from the separate public CbC regime) for periods from 1 January 2025, including the evidence expected to accompany exemption requests and the circumstances in which relief may apply. Groups relying on historical exemption practice should check their position against the updated text.

GST decision impact statement on Geocon. A decision impact statement on Geocon Land Holdings No. 5 Pty Ltd v Commissioner of Taxation [2025] FCAFC 172 appeared in the ATO's published guidance updates this week. The Full Federal Court had allowed the taxpayer's appeal on the Division 142 excess GST issues and remitted the matter for redetermination, and special leave to appeal was refused in March 2026. The statement records the Commissioner's position that the decision on the attribution, excess GST, non-monetary consideration and windfall gain issues is consistent with existing ATO views on each of those issues. Property developers using non-monetary consideration arrangements should read the statement itself against their current attribution positions rather than relying on summaries.

Superannuation guarantee: 28 August deadline for June quarter shortfalls. Employers whose June 2026 quarter contributions were not received by employees' funds by 28 July 2026 must lodge a superannuation guarantee charge statement and pay the charge by 28 August 2026, rather than paying the fund directly. This is the last quarter administered wholly under the former quarterly regime, and the former late payment offset is not available for it, so a late payment made to the fund does not discharge the charge and can leave an employer paying twice, with both amounts non-deductible. Anything paid on or after 1 July 2026 should be tested against the Payday Super transitional rules in LCR 2026/1 rather than the former quarterly framework.

Foreign resident CGT: tranche 2 submissions close today. Submissions on the second tranche of the CGT and negative gearing draft legislation, covered in last week's brief, close on 21 August 2026.

The calendar below carries forward the tracker, with foreign rows retained from prior editions and updated where noted. The nearest live date remains the Dutch top-up tax return on 31 August 2026, which the Dutch penalty relief does not move: the fine holiday under Decree No. 2026-14582 runs to 31 October 2026, and a separate administrative restraint policy applies where the information declaration for 31 December 2024 book years is filed by 31 December 2026, with tax interest running throughout in both cases. The structural addition this week is the exchange of GloBE Information Returns between administrations expected towards the end of September, which is not a taxpayer obligation but changes what administrations can see and should be planned for like one. Relief mechanics continue to differ by jurisdiction, so the tracker should distinguish registration, notification, filing and payment rather than carry a single date per country. The Hong Kong, Canadian and United States consultation rows are related dates rather than Pillar Two filing obligations and are retained because they compete for the same team's time; nearer Australian dates are covered in the sections above. Foreign dates and relief conditions should be confirmed against the relevant local authority guidance before action is taken.