Company Tax Rate
The flat rate of tax applied to company profits — 25% for base rate entities (turnover under $50 million) and 30% for others.
Australian companies pay income tax at a flat rate on their taxable income, rather than the progressive rates that apply to individuals. For 2025–26, the rate is 25% for "base rate entities" (companies with aggregated turnover less than $50 million and no more than 80% passive income) and 30% for all other companies. This distinction is important for franking credits — dividends paid from profits taxed at 25% carry a maximum franking rate of 25%.
Companies lodge a separate tax return (the company tax return) and pay tax independently of their shareholders. When the company distributes profits as dividends, shareholders include the dividend and attached franking credits in their assessable income, and receive a tax offset for the franking credits. This imputation system prevents double taxation of company profits.
The company tax rate can be advantageous for retaining profits in the business (taxed at 25% or 30% instead of potentially 45% for high-earning individuals). However, extracting profits through wages or dividends will ultimately be taxed at the individual's marginal rate. The main benefit of the company structure is liability protection and the ability to defer personal tax on retained profits, rather than a permanent tax saving.