Pillar Two: a new return, new guidance and a peer review.

The Inclusive Framework has released a revised GloBE Information Return, new administrative guidance and the terms of a peer review of every country's Pillar Two legislation. The Federal Court has upheld a Part IVA determination adding $173 million to assessable income on a pre-sale hotel restructure, holding that the Commissioner can rely on more than one reasonable alternative. The expanded foreign resident CGT rules received Royal Assent on 15 September. Treasury has released exposure drafts on the R&D Tax Incentive, a new innovation CGT concession and electric vehicle FBT, with submissions closing 28 September.

The 11 September Pillar Two package changes the compliance product rather than the tax. A group filing its first GloBE Information Return for a 2024 fiscal year continues on the original schema. A group with a fiscal year beginning on or after 31 December 2025 files on the revised return, which carries the side-by-side election and the reporting exemptions that go with it. The explanatory notes apply to every filing regardless of year. The practical consequence is that the data specification for the first return is not the data specification for the second, and the systems work needs to reflect that.

The administrative guidance is narrower but matters for the effective tax rate calculation. A tax that is imposed only because an income inclusion rule or undertaxed profits rule applies elsewhere is not a covered tax. The qualified domestic minimum top-up tax safe harbour remains available where the local calculation uses local accounting standards, even if the local fiscal period does not match the parent's. Both points resolve questions that groups had been answering by assumption.

At home, the Hilton decision gives the Commissioner a wider path to a Part IVA tax benefit. The Court accepted three of four alternative postulates and held that each was capable of establishing the benefit independently. It also rejected the taxpayer's own alternative on the basis that it would itself have been a scheme. The case turns on a 2015 restructure, but the reasoning applies to any pre-exit reorganisation where the group wants the sale to occur at a level that produces no Australian gain.

The legislative programme is busy. The foreign resident CGT expansion is now law and applies to existing holdings from commencement. The R&D Tax Incentive exposure draft raises every offset rate by 4.5 percentage points from 1 July 2028, but it also narrows access to the refundable offset by company age. The consultation window on all of the 11 September drafts closes on 28 September, which leaves little time for groups with a position to put.

The OECD/G20 Inclusive Framework released three documents on 11 September. The revised GloBE Information Return supersedes the January 2025 version and incorporates the side-by-side package. It applies to fiscal years beginning on or after 31 December 2025. Filings for earlier fiscal years continue on the original XML schema until a cut-off date to be specified in a forthcoming user guide. The revised explanatory notes and the clarified guidance on existing data fields apply to all filings, whichever version is used. The release also flags coordinated follow-up information requests and joint risk assessment using GloBE Information Return data.

The administrative guidance confirms two points. First, a tax that is explicitly conditional on a group entity being subject to an income inclusion rule or undertaxed profits rule elsewhere is not a creditable covered tax. Second, the qualified domestic minimum top-up tax safe harbour continues to apply where the domestic calculation uses local financial accounting standards, even where the domestic fiscal period does not align with the ultimate parent's.

The third document sets out the terms of reference and methodology for a full legislative review. Inclusive Framework members will review each other's domestic Pillar Two legislation against the Model Rules. The transitional qualified status that jurisdictions currently hold was granted on a self-certification basis. A full review is the mechanism by which that status is confirmed or withdrawn, and a jurisdiction that loses qualified status loses the safe harbour treatment its domestic minimum tax currently attracts.

The United States Treasury issued a statement the same day describing the revised return as operationalising the side-by-side framework: qualifying US-headquartered groups can elect out of the income inclusion rule and undertaxed profits rule while remaining subject to US minimum taxes, with reporting exemptions for electing groups. The Netherlands has already introduced the domestic legislation. Its side-by-side bill presented with the 2027 Tax Plan on 15 September defines a qualifying equivalent minimum tax system by reference to a statutory corporate rate of at least 20 per cent, a domestic minimum tax of at least 15 per cent and enactment before 1 January 2026. On those criteria, only the United States currently qualifies. The Dutch bill also makes the simplified effective tax rate safe harbour permanent from fiscal years beginning on or after 31 December 2026 and extends the transitional country-by-country safe harbour to fiscal years beginning on or before 31 December 2027.

For Australian subsidiaries of US groups, the question is whether the parent will make the election and what that means for the Australian domestic minimum tax return, which is unaffected by the election. For Australian-headquartered groups, the immediate task is to confirm which return version applies to each fiscal year in the reporting calendar and to review the data mapping against the revised explanatory notes.

In Hilton International Australia Pty Ltd v Commissioner of Taxation (No 2) [2026] FCA 1325, delivered on 9 September, the Federal Court dismissed the taxpayer's appeal against a Part IVA determination on a 2015 restructure preceding the sale of the Sydney Hilton. Hotel assets worth approximately $420 million were transferred within the multiple entry consolidated group before the shares in the holding entity were sold to an external buyer for $442 million. A direct sale of the assets would have produced a taxable gain of approximately $173.3 million to the head company. The structure adopted produced no gain to the head company and a gain of approximately $21 million to the Luxembourg resident seller.

Three findings matter beyond the facts. The Court held that Part IVA does not require the Commissioner to identify a single most reasonable counterfactual. Three of the four alternative postulates advanced were each held to be reasonable and each independently sufficient to establish the tax benefit. The Court rejected the taxpayer's own alternative postulate on the basis that it would itself have been a scheme to which Part IVA applied. On purpose, the Court applied the High Court's reasoning in Commissioner of Taxation v PepsiCo Inc [2025] HCA 30 and relied on contemporaneous documents referring to the minimisation of tax leakage, in circumstances where the board papers did not record a tax rationale.

The practical consequence is that a pre-sale restructure inside a consolidated or MEC group cannot be defended solely by showing that the Commissioner's preferred counterfactual was not the most likely one. If several reasonable alternatives produce a gain, the taxpayer has to deal with each of them. Groups planning an exit should record the commercial reasons for the chosen structure at the time the decision is made, and should test the structure against every plausible alternative rather than the one the group considers most realistic.

The Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Act 2026 received Royal Assent on 15 September as Act No. 86 of 2026, having passed the Senate on 10 September. Schedule 2 broadens the foreign resident capital gains tax regime. It introduces a statutory definition of real property covering interests and rights in Australian land, fixtures, water entitlements and rights to acquire them. It extends the regime to certain energy, transport and telecommunications infrastructure connected with Australian land. It replaces the point-in-time principal asset test for indirect interests with a 365-day testing period.

The rules apply prospectively from commencement, but they apply to existing holdings. A foreign investor whose interest was outside the regime under the old test can be inside it on disposal without any change in the underlying assets. Schedule 3 extends the 50 per cent CGT discount for foreign residents disposing of eligible renewable energy assets to 30 June 2040. Schedule 8 allows a foreign resident CGT withholding credit in the same income year as the underlying transaction, provided the withheld amount has been paid to the Commissioner. Separately, the ATO's consolidated withholding variation instrument for foreign resident capital gains withholding took effect on 17 September, replacing five earlier instruments and amending the evidentiary requirements for the tax-exempt entity variation.

Foreign groups holding Australian infrastructure or indirect land-rich interests should re-test their position under the new definition and the 365-day test before the next disposal or restructure. The withholding position should be checked at the same time, since the consolidated instrument changes what has to be provided to obtain a variation.

Treasury released exposure draft legislation on 11 September for the Budget measures on the R&D Tax Incentive, a new innovation CGT concession and expanded venture capital limits. Submissions close on 28 September.

From 1 July 2028, every R&D offset rate rises by 4.5 percentage points. The refundable rate moves from 18.5 to 23 per cent above the corporate rate. The non-refundable rates move from 8.5 to 13 per cent and from 16.5 to 21 per cent. The intensity threshold for the premium rate falls from 2 per cent to 1.5 per cent of total expenditure. The aggregated turnover threshold for the refundable offset rises from $20 million to $50 million. The minimum expenditure threshold rises from $20,000 to $50,000 and the expenditure cap from $150 million to $200 million. Access to the refundable offset is limited to companies up to 10 years old, or 15 years for biotechnology and medical technology companies.

The new Innovative Business CGT Concession gives a 50 per cent discount on gains from qualifying investments in early-stage innovative companies held for at least three years, for CGT events from 1 July 2027. Venture capital limited partnership and early-stage venture capital limited partnership investment and fund-size caps increase from 1 July 2027.

For multinational groups with Australian R&D subsidiaries, the rate increase improves the after-tax cost of local research from FY2029. The company-age limit on the refundable offset is the item to check. A subsidiary that has been claiming the refundable offset may move to the non-refundable offset on the basis of its incorporation date alone. Groups with a view on the age test, the intensity threshold or the transitional treatment have until 28 September to put it.

Belgium: DAC9 top-up tax reporting bill with penalties up to EUR 250,000. The Belgian Minister of Finance submitted draft legislation on 10 September transposing Directive 2025/872 on the exchange of Pillar Two information reports. The ultimate parent or another EU group entity may file. Correction statements are due within one month of a request. Penalties for non-filing, late filing or non-payment range from EUR 2,500 to EUR 125,000, doubled for fraudulent intent, with lower ranges for incorrect or incomplete filing. The first exchange occurs no earlier than 1 December 2026. The law applies retroactively from 1 January 2026 once gazetted.

New Zealand: GloBE compliance timetable confirmed. Inland Revenue updated its guidance on 9 September. A designated New Zealand constituent entity must register within six months of the first affected fiscal year end. The GloBE Information Return is due 18 months after the first affected fiscal year end, or 15 months for New Zealand-headquartered groups. The top-up tax return is due 20 months after the first fiscal year end and 16 months thereafter, and will be available from April 2027. The income inclusion rule and undertaxed profits rule apply to fiscal years beginning on or after 1 January 2025 and the domestic income inclusion rule from 1 January 2026. For a foreign-headquartered group with a 31 March balance date, the first affected fiscal year ends 31 March 2026, so registration is due by 30 September 2026 and the first GloBE Information Return by 30 September 2027.

Albania: subject to tax rule convention enters into force 1 January 2027. Albania became the second jurisdiction after San Marino to ratify the multilateral convention implementing the Pillar Two subject to tax rule on 15 September. With two ratifications deposited, the convention enters into force for those two jurisdictions on 1 January 2027. The extent to which Albania's 21 listed treaties are modified depends on the positions of the other signatories. This is the first confirmed entry into force date for the instrument.

Canada: Supreme Court declines to hear Husky beneficial ownership appeal. The Supreme Court of Canada denied leave to appeal in Husky Energy Inc. v His Majesty the King. The Federal Court of Appeal's finding stands: Luxembourg intermediaries that were contractually obliged under a securities lending arrangement with related Barbados lenders to pass on the economic value of dividends were not the beneficial owners of those dividends under the Canada-Luxembourg treaty, and the 5 per cent treaty rate was denied. The decision confirms an economic substance approach to beneficial ownership in Canada.

Netherlands: 2027 Tax Plan and dividend withholding positions. The 2027 Tax Plan presented on 15 September raises the innovation box fixed deduction cap from EUR 25,000 to EUR 100,000, amends the treatment of foreign exchange hedges under the participation exemption and removes the statutory three-year abuse presumption in mergers and demergers following the Supreme Court's February 2026 ruling that it breached the Merger Directive. A companion bill introduces a deferred taxation regime for share options in qualifying start-ups and scale-ups, taxing 65 per cent of the sale gain, with potential retroactive application to options granted on or after 17 April 2025. Separately, two Tax Administration knowledge group positions published on 15 September confirm that an EU intermediate holding company whose controlling individual performs genuine strategic functions from an EU office at an arm's length salary is not abusive for dividend withholding purposes, even below the EUR 100,000 salary benchmark. An earlier decree, effective 20 August, adopts the OECD commentary on home office permanent establishments: a home office generally does not create a permanent establishment where the employee works there less than 50 per cent of total working time over 12 months.

European Union: customs reform and CBAM extension approved by Parliament. The European Parliament approved the EU customs reform on 16 September, following Council approval on 3 September. Non-EU sellers and platforms selling directly to EU consumers become the importer of record and will need EU establishment or representation through a trusted trader. An EU-wide handling fee on non-EU consignments applies from 1 November 2026 at the latest, in addition to the transitional EUR 3 duty on consignments under EUR 150 that has applied since 1 July 2026. A new EU Customs Authority will be established in Lille. On 15 September the Parliament also adopted its position extending the carbon border adjustment mechanism to downstream steel and aluminium products and tightening the anti-circumvention rules.

United States: research expensing transition relief and GILTI deduction allocation. Revenue Procedure 2026-32 expands automatic consent for accounting method changes as taxpayers move from mandatory section 174 capitalisation to restored domestic research expensing under section 174A for tax years beginning after 31 December 2024. Foreign research costs remain subject to 15-year amortisation. Key dates are 21 September, 21 October and 15 November 2026. Separately, proposed regulations provide that interest expense and research expenditure may not be allocated to the GILTI category for foreign tax credit limitation purposes, and are excluded from deduction-eligible income and foreign-derived deduction-eligible income, for tax years beginning after 31 December 2025. Comments close 10 November. Taxpayers may rely on the proposed rules now if applied in full.

Ukraine: transfer pricing overhaul proposed from 1 January 2028. Draft Law No. 16035, submitted on 4 September, would extend the arm's length principle to domestic related party transactions where one party has significant losses or preferential treatment, cap the return of a lender that does not bear risk at the risk-free rate, require DEMPE analysis of intangibles based on functions actually performed, and introduce a penalty scale starting at 7 per cent.

Brazil: CPRB stays in the PIS/COFINS base. In a binding repetitive appeals ruling on 9 September, the Superior Court of Justice held that the social security contribution on gross revenue must remain in the PIS/COFINS base, distinguishing it from the state VAT that was excluded in 2017 on the basis that the contribution is cumulative and not passed on. The decision closes a widely litigated refund claim.

Spain: telework from Spain for a foreign employer is taxable only in Spain. Binding ruling V1339/2026 confirms that a Spanish resident teleworking full time from Spain for a Portuguese employer with no Spanish permanent establishment is taxable exclusively in Spain under Article 15(1) of the Portugal-Spain treaty. The employer has no Spanish withholding obligation and the employee self-reports. The ruling applies the physical presence approach rather than the 2025 OECD telework commentary.

Uzbekistan: foreign marketplaces must register for VAT from 12 December 2026. Under Law No. ЗРУ-1173 signed on 10 September, foreign marketplaces must register within 30 days of their first transaction, file quarterly VAT returns and pay by the 20th of the following month. Uzbek payment processors are designated tax agents for foreign sellers.

Electric vehicle FBT exemption to become a 25 per cent discount An exposure draft released on 11 September replaces the 100 per cent FBT exemption for eligible electric vehicles with a 25 per cent discount. The discount applies from 1 April 2027 to eligible vehicles valued above $75,000 and up to the fuel-efficient luxury car tax threshold ($91,661 for 2026-27), and from 1 April 2029 to all eligible vehicles up to that threshold. Vehicles valued at $75,000 or less retain the full exemption where the arrangement is committed before 1 April 2029. Submissions close 28 September. Groups running novated lease or fleet programmes should time vehicle commitments against the two step-down dates.

Monthly PAYG instalments by election from 1 July 2027 A Treasury exposure draft would allow taxpayers to elect monthly rather than quarterly PAYG instalments from 1 July 2027, and would require monthly instalments for taxpayers with a demonstrated history of non-compliance. Submissions close 28 September. The mandatory limb is the one to note for groups that have had lodgment or payment issues with the ATO.

Reminder: software royalty PCG consultation closes 2 October Comments on draft PCG 2026/D4, the ATO's compliance approach to royalty characterisation of payments under intermediation and distribution arrangements, close on 2 October. The final ruling, TR 2026/2, is not reopened by that date. Our special edition of 5 September and the follow-up of 10 September set out the issues. Groups distributing software or IP-embedded products into Australia that intend to make a submission should be drafting now.

Minimum tax on discretionary trusts: submissions closed today Submissions on the exposure draft implementing the 30 per cent minimum tax on discretionary trusts closed on 18 September. The draft includes an election allowing a discretionary trust to become a non-minimum tax trust from 1 July 2028 by nominating fixed beneficiary entitlements. The election is largely irrevocable and is revoked automatically on any deviation, after which the trust is taxed at the top marginal rate under section 99A. CGT rollover relief is available for restructures, but all non-excluded assets must be transferred out of the trust by 30 June 2030 and a four-year clawback applies. No state stamp duty concession is provided for either the election or the rollover. Private groups and trust structures sitting beneath multinational investors should model both paths before the legislation is introduced.

Registration, information reporting, domestic returns and payment can follow different timetables. Match each row to the group's fiscal year. The extensions and relief below are limited to the stated obligations and periods.