What this determination covers
The Australian Taxation Office has issued Tax Determination TD 2022/9, updated to reflect changes made by the US One Big Beautiful Bill Act 2025. The determination rules that section 951A of the US Internal Revenue Code does not correspond to Australia's controlled foreign company (CFC) rules in sections 456 or 457 of the Income Tax Assessment Act 1936.
Section 951A of the US Internal Revenue Code is the provision that taxes US companies on income earned by their foreign subsidiaries. This regime was originally called GILTI (Global Intangible Low-Taxed Income) and has been renamed Net CFC Tested Income (NCTI) following the US One Big Beautiful Bill Act 2025 amendments.
Effect on Australia's hybrid mismatch rules
The determination addresses whether income included under the US GILTI or NCTI regime counts as income that is subject to foreign income tax under Australia's hybrid mismatch rules in Division 832 of the Income Tax Assessment Act 1997.
The ATO's ruling is that income picked up by the US NCTI or GILTI regime:
- does not qualify as dual inclusion income under Division 832
- does not reduce a deduction or non-inclusion mismatch under the hybrid mismatch rules
- does not satisfy the subject to foreign income tax test in subsection 832-130(5)
US One Big Beautiful Bill Act 2025 amendments
The US One Big Beautiful Bill Act 2025 made the following changes to the GILTI regime, applying to US taxable years beginning after 31 December 2025:
- renamed GILTI as Net CFC Tested Income (NCTI)
- reduced the section 250 deduction from 50% to 40%
- increased the section 960(d) deemed paid credit from 80% to 90%
The ATO has confirmed that section 951A of the US Internal Revenue Code still does not correspond to sections 456 or 457 of the Income Tax Assessment Act 1936 after these changes.
When the determination applies
The determination applies both before and after its original issue date of 29 June 2022. The amendments relating to the US One Big Beautiful Bill Act 2025 apply to US taxable years beginning after 31 December 2025.
Reliance on this ruling
Businesses that correctly rely on this ruling will not be charged extra tax, penalties, or interest on matters the determination covers.
The full ruling and its compendium TD 2022/9EC are available at https://www.ato.gov.au/law/view/document?docid=TXD/TD20229/NAT/ATO/00001.
Key actions stated in the determination
- Check with a tax adviser whether payments made to related US entities could create a hybrid mismatch under Division 832, given that US NCTI or GILTI inclusions do not count as subject to foreign income tax under subsection 832-130(5).
- Review any positions that have relied on US GILTI or NCTI inclusions to offset a deduction or non-inclusion mismatch, or to establish dual inclusion income under Division 832, against this determination.
- Note the US One Big Beautiful Bill Act 2025 amendments - the GILTI regime has been renamed NCTI and amended for US taxable years beginning after 31 December 2025 - and that the ATO's position remains unchanged following those amendments.
- Read the full ruling and compendium TD 2022/9EC at https://www.ato.gov.au/law/view/document?docid=TXD/TD20229/NAT/ATO/00001.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.