Base rate entity threshold: $50,000,000.00
Must be under 80% to qualify for the base rate
Taxable Income
$500,000.00
Tax Payable
$125,000.00
Tax Rate
25.0%
Effective Rate
25.0%
Quarterly
$31,250.00
Profit After Tax
$375,000.00
Profit Breakdown
Qualifies for Base Rate (25%)
Turnover under $50M and passive income under 80%.
Everything you need to know about Australian company tax
Company Tax Rates in Australia
Australian companies pay tax at either 25% (base rate entities) or 30% (all other companies). To qualify for the 25% base rate, your company must have aggregated turnover under $50 million and no more than 80% of assessable income from passive sources (interest, dividends, rent, royalties, capital gains).
What is a Base Rate Entity?
A base rate entity is a company with an aggregated turnover of less than $50 million that derives no more than 80% of its assessable income from base rate entity passive income. This includes most small to medium businesses with active trading operations.
PAYG Instalments
Companies pay their tax through quarterly PAYG instalment payments. The ATO calculates your instalment rate based on your most recent tax return. Quarterly instalments help spread your tax liability throughout the year.
Franking Credits and Dividends
When a company pays tax, it generates franking credits. These credits are attached to dividends paid to shareholders, preventing double taxation. A base rate entity can only frank dividends at 25%, while full rate entities can frank at 30%.
Tax Planning Considerations
The difference between 25% and 30% can be significant. A company earning $1 million saves $50,000 in tax at the base rate. Consider your passive income ratio carefully -- restructuring passive investments outside the company may help maintain base rate entity status.
ATO-Aligned: This calculator uses official ATO company tax rates for the 2025-26 financial year. Consult a registered tax agent for complex corporate tax situations.
How Australian company tax rates work, including the base rate for small businesses
What are the company tax rates in Australia?
Australia has two company tax rates. Base rate entities pay 25% on their taxable income. All other companies pay the full rate of 30%. The base rate applies to companies with an aggregated turnover of less than A$50 million that earn no more than 80% of their income from passive sources (like interest, dividends, rent, or royalties). Most small and medium businesses qualify for the 25% rate.
What is a base rate entity?
A base rate entity is a company with aggregated turnover under A$50 million where no more than 80% of its assessable income is base rate entity passive income. Passive income includes interest, dividends, rent, royalties, and net capital gains. If your company earns A$2 million from trading and A$100,000 from interest, passive income is about 5% — well under 80% — so you qualify for the 25% rate.
How do you calculate company taxable income?
Start with total assessable income (sales, fees, interest, other income), then subtract all allowable deductions (wages, rent, supplies, depreciation, super contributions). The result is your taxable income. For example, if your company earned A$500,000 in revenue and had A$350,000 in deductions, taxable income is A$150,000. At the 25% base rate, company tax would be A$37,500.
What is franking and how does it work?
When a company pays tax on its profits and then distributes those profits as dividends, it attaches franking credits to the dividends. These credits represent tax already paid by the company. Shareholders include the dividend plus the franking credit in their taxable income, then get a tax offset for the credit. If the credit exceeds their personal tax, they get a refund. This prevents the same income being taxed twice.
When is a company tax return due?
If you lodge your own return, it is due by 28 February following the end of the financial year (30 June). If you use a registered tax agent, you usually get an extension to around 15 May or later, depending on your circumstances. Companies must also lodge Business Activity Statements (BAS) monthly or quarterly for PAYG instalments and GST. Late lodgement attracts penalties from the ATO.
What deductions can a company claim?
Companies can deduct any expense incurred in earning assessable income. Common deductions include employee wages and super, office rent and utilities, equipment and depreciation, professional fees, insurance, marketing, travel, and motor vehicle expenses. The instant asset write-off lets eligible businesses deduct the full cost of assets costing up to A$20,000 each immediately rather than over several years.
How do PAYG instalments work for companies?
The ATO requires companies to pay tax in instalments throughout the year rather than a lump sum at year end. PAYG instalments are based on your most recent tax assessment. You pay quarterly (or monthly for larger companies) and report them on your BAS. At year end, the total instalments are credited against your actual tax bill. If you overpaid, you get a refund. If you underpaid, you owe the balance.
What is the difference between a company and a sole trader for tax?
A sole trader pays personal income tax at marginal rates up to 45% plus Medicare Levy. A company pays a flat 25% or 30%. For profits above about A$120,000, a company structure can save significant tax. However, company profits are taxed again when distributed as dividends (offset by franking credits). Companies also have higher compliance costs — annual returns, ASIC fees, and more complex accounting.
ATO-Aligned: Based on 2024-25 ATO rates and thresholds. For personal advice, speak to a qualified tax agent.
Disclaimer: This calculator provides estimates based on current ATO rates and thresholds for the 2024–25 financial year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax agent before making financial decisions. Read our terms
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