What is Company Tax (Australia)?
Company Tax is the federal tax Australian companies pay on taxable income. The base rate is 25% for 'base rate entities' (turnover under A$50 million and ≤80% passive income). All other companies pay 30%. There is no separate state-level company tax.
Current Rate (Australian Financial Year: 1 July to 30 June)
25% (base rate entity) / 30% (other companies)
Example
A Pty Ltd with A$1.2 million turnover and A$200,000 trading profit pays A$50,000 company tax (25%, base rate entity). A larger company with A$80m turnover would pay A$60,000 (30%).
How Company Tax (Australia) works in Australia
Australia's two-tier company tax rate aims to support small and medium business. To qualify for the 25% base rate, a company must have aggregated turnover under A$50 million AND have no more than 80% of its income classified as 'base rate entity passive income' (interest, rent, royalties, net capital gains, etc.).
Franking credits attach to dividends paid out of taxed profits. Resident shareholders gross up the dividend, claim the franking credit against their personal tax, and receive a refund if they have unused credits. This integrates company and shareholder taxation and is unique to Australia and New Zealand.
Related terms
A proprietary limited company is the most common Australian business entity. Owners' liability is limited to their share capital, and the company is a separate legal person. Maximum 50 non-employee shareholders. Must have at least one Australian-resident director.
The Australian Business Number is an 11-digit identifier issued to businesses by the Australian Business Register. Without an ABN, payers must withhold 47% from your invoice. Required for GST registration, business name registration, and most B2B trading.
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