Rachael Ogilvie-Harris, a partner in international tax at KPMG’s Toronto office, has spent much of the past three years immersed in a new tax regime that has some family offices sitting up and taking notice.
The so-called Pillar Two tax reform framework, a global effort launched by the Organisation for Economic Cooperation and Development (OECD) and the G20, has been agreed on by about 140 countries. It’s an attempt to level the tax playing field worldwide and address challenges arising from the digitalization of the economy, according to the OECD.
Governments are trying to ensure that multinationals pay 15 per cent tax in each country that they’re in, says Ogilvie-Harris. “It’s a new set of numbers and new set of calculations that need to be prepared.”
Ogilvie-Harris is likely to remain busy, as June 30, 2026, marks the first filing deadline for the larger multinational enterprises who qualify.
In Canada, Pillar Two is being implemented through the Global Minimum Tax Act, which received royal assent on June 20, 2024. The rules apply only to multinational firms with global annual revenue of at least €750 million euros (about CAD$1.2 billion).
Most smaller single-family offices will likely not be affected. But if an FO controls or owns an international business group of that size—or manages firms that do—the rules apply, and compliance is mandatory, with penalties for non-compliance. Meeting the requirements could mean family office advisors need to deepen their tax expertise; build cross-disciplinary teams of tax, IT, and finance professionals; and prepare consolidated tax statements on behalf of the families they represent.
“A lot of private families or private companies may not prepare consolidated financial statements at the level of the ultimate parent entity,” says Richard Yuen, senior manager for international tax and Canada Pillar Two Lead for BDO Canada in Vancouver.
“They’ve got to invest some resources into this,” he says. “If you’re big enough, you’re subject to greater scrutiny.”
History of Pillar Two tax rules
The regime was introduced in 2021 by the OECD. The Canadian legislation includes a top-up tax designed to ensure that multinational enterprises with consolidated revenues above €750 million in at least two of the previous four fiscal years pay a minimum 15 per cent in corporate tax in each jurisdiction in which they operate.
The global minimum tax forms part of the OECD’s broader efforts to address base erosion and profit shifting (BEPS), in which multinationals shift profits to low- or no-tax jurisdictions where they have little or no economic activity, or erode tax bases through deductible payments such as interest or royalties, leading many countries to lose tax revenue, according to the OECD.
“Pillar Two is different in its design,” says Yuen. “Instead of focusing solely on where profits should be taxed, it’s about how much tax should be paid. With a 15-per-cent minimum in place, countries are signaling that there’s a limit to how far tax competition should go.”
The United States initially issued an executive order in response to these measures—which it considered to be “unfair foreign taxes”—and informed the OECD that any commitments made by the previous presidential administration will “have no force or effect,” according to KPMG. However, as of January 2026, it reached a side-by-side “safe harbour” agreement, meaning that, in U.S. tax systems that produce similar minimum-tax outcomes for domestic and foreign income, U.S.-parented multinationals will still need to remain compliant, though the scope is reduced.
Impact on family offices
When family business subsidiaries operate in low-tax jurisdictions such as the Caribbean or parts of Asia, the Pillar Two rules can impose a top-up tax to meet the 15-per-cent minimum—potentially increasing a family’s overall tax burden.
The administrative burden on family office advisors is expected to increase significantly.
Compliance often necessitates expanded accounting teams capable of gathering more granular data locally and producing efficient, standardized reporting.
“It’s quite complex and is very heavy,” says Yuen.
The first step for advisors is determining whether a family is “in scope,” says Yuen. That means preparing consolidated financial statements, a task many private firms are unaccustomed to doing and one that can require significant time and resources.
Yuen says most of these firms conduct the majority of their operations in Canada, with some investment in the United States. “That may get them to become an international group, depending on how their U.S. activities are conducted,” he adds.
If a family business qualifies, the Canada Revenue Agency must be notified. Tax authorities in other jurisdictions where the business operates must also be informed, says Yuen.
In addition, the rules demand a high level of sophistication, Yuen says, and filing requires specific CRA-mandated software. “It’s in a specific format so that they can exchange it between governments,” he says.
For firms that are not yet fully compliant, a transitional safe harbour is available, although it applies only to groups that come into scope as of 2026. Firms that were already in scope in 2024 and 2025—when the rules took effect—must comply by June 30 of this year.
“Most groups are going to try to rely on this safe harbour during the first few years of the transitional period,” Yuen says, noting that the OECD recently extended the safe harbour by an additional year.
Failure to comply could result in penalties of $25,000 per complete month of late filing to a maximum penalty of $1 million, according to a 2024 Deloitte report.
Yuen expects Pillar Two to evolve and become more streamlined over time, a view Ogilvie-Harris shares. “It is not a steady state—it is continuously evolving,” she says.
Ogilvie-Harris says this year marks the first full round of compliance, one that will help shape how the process evolves. “This is still new,” she says, “for all companies who are trying to get themselves up to speed.”
Anna Sharratt is a business and health reporter and editor with more than 20 years of experience. Based in Toronto, she has written for Canadian Family Offices since 2021. A regular contributor to the Globe and Mail, she has written for Inc.com, Forbes, Business Insider, Canadian Business, MoneySense, the National Post, The Toronto Star and other publications. She is the former managing editor of smallbiz.ca, health editor of Chatelaine and senior health writer for the CBC.
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