Australia corporate tax rate, incentives, filing dates, and compliance explained

Australia continues to attract global businesses looking for stability, scale, and long-term growth. With a resilient economy, transparent regulatory environment, and strong trade links across Asia-Pacific, it is often seen as a natural expansion destination for companies operating internationally or planning their next market move.

That said, understanding Australia’s corporate tax system is essential before setting up operations. From company tax rates and taxable income to incentives, filing obligations, and double taxation agreements, the rules can directly affect your cash flow and compliance risk.

This guide breaks down how corporate tax in Australia works, what foreign and local businesses need to know, and how to manage tax obligations efficiently as you grow.

Why expand to Australia?

Australia is one of only nine countries to receive an AAA credit rating from the three major ratings agencies (Fitch, Moody's, S&P)—a testament to its financial and political stability. Many companies prefer operating Down Under because it's geographically conducive to conducting business with China, Japan, India, and the larger Southeast Asia market, and boasts a thriving tech industry and skilled workforce.

While foreign firms appreciate Australia's fiscal stability, small businesses are charmed by its tax concessions and thriving start-up ecosystem.

Corporate tax in Australia

Australia implements a two-tier corporate income tax system. Corporations with annual turnover over AUD 50 million are taxed at 30%. Smaller businesses with less than AUD 50 million in annual turnover benefit from a lower company tax rate of 25%.

Company tax applies to net income, which is assessable income minus allowable deductions.

Resident companies pay company tax on worldwide income, while non-resident companies are taxed on their Australian-sourced income. However, if a foreign company is a tax resident of a country with which Australia has a double taxation agreement, then only business profits attributable to the company's permanent establishment in Australia are taxed.

Tax rates and structures: Base rate entity explained

To understand Australia's corporate tax landscape, one must understand the base rate entity. A base rate entity is any company that qualifies for the lower company tax rate of 25%. To qualify, a business must fulfil two criteria:

• Its aggregated turnover (income from the company and all its related entities) must be below AUD 50 million for the income year.
  
• No more than 80% of its assessable income must comprise base rate entity passive income—income earned from investments and assets that don't require active participation, unlike regular business activities. Example, income from dividends, interest, royalties. This is to ensure only genuine small companies with active businesses benefit from the concessional company tax rate.
  

A company's base rate entity status is assessed annually.

What is taxable income?

Calculating corporate income tax in Australia starts with computing taxable income.

To do this, take assessable income (or gross income)—revenue from the sale of goods/services, foreign income, income from dividends, interest, rental income, government payments, changes in stock value, etc. If a company receives goods/services instead of money in return for its products/services, their market value must also be included in assessable income.

Next, subtract allowable deductions from assessable income to arrive at taxable income.

Deductible expenses include:

• Operational expenses (salaries, rent, utilities)
  
• Business-related purchase of products/services
  
• Capital expenses (depreciation costs)
  
• Safety-related expenses for staff (protective gear, sanitisers)
  
• Professional fees (accounting, legal).
  

No tax deduction is allowed on the following types of expenses:

• Private or domestic expenses
  
• Entertainment expenses
  
• Fines and penalties
  
• Expenses related to earning income that isn't part of daily business operations (asset sales, etc)
  
• The GST component of a purchase, if it can be claimed as a GST credit.
  

Tax incentives and exemptions

Australia offers tax incentives to draw foreign investment and innovation. Here are some:

Foreign income tax offset

Businesses can claim a tax offset or credit on foreign tax paid in another country. To be eligible, a company must have paid or deemed to have paid foreign tax, and the foreign income on which it paid tax must be part of its assessable income in Australia.

Foreign income tax offsets are usually part of the mechanism of a double taxation agreement (DTA). However, companies can claim it in Australia even if Australia doesn't have a DTA with the country where the income was taxed.

Small business tax concessions

A small firm can claim an immediate deduction of the cost of an asset in the year it is first used or installed. Companies with an aggregated turnover of less than AUD 10 million per year and an asset cost of less than AUD 20,000 are eligible for this tax concession. Write-offs are allowed on multiple assets.

R&D tax offset

To incentivise research and development, Australia provides two R&D tax offsets:

• Companies with aggregated turnover below AUD 20 million per year get a refundable tax credit that amounts to the applicable company tax rate plus an 18.5% premium.
  
• Companies with an aggregated annual turnover of at least AUD 20 million get a non-refundable tax offset equal to the applicable company tax rate plus a two-tiered premium based on the portion of total expenditure that R&D cost comprises. The premium is 8.5% if R&D expenditure is up to 2% of total expenditure, and 16.5% if it is more than 2% of total expenditure.
  

When to file tax returns

Under Australian tax laws, businesses (local and foreign) must file company tax returns whether they have earned taxable income or not. The returns may be submitted to the Australian Taxation Office on paper, electronically, or through a registered tax agent.

Company tax return due dates depend on whether a business lodges directly or through a registered tax agent. Many companies use tax agents lodge between January and May, while self-lodged returns are generally due earlier.

Corporate tax payments must be made in AUD. Non-resident companies must use ATO-specified exchange rates for currency conversion.

To help businesses spread out their tax liability, Australia implements PAYG (pay as you go) instalments. Most corporate taxpayers pay quarterly instalments, with the payment due 28 days after each quarter. Businesses with instalment income exceeding AUD 20 million make monthly instalments by the 21st of the following month. In certain circumstances, the ATO allows companies to pay in one or two instalments.

Reducing tax burden with double taxation agreements

Australia has double taxation agreements with 40+ countries. These treaties serve to prevent dual taxation and tax evasion while strengthening economic growth and cooperation.

Singapore has a comprehensive DTA with Australia dating back to 1969. Additionally, the two signed the Multilateral Instrument in 2017 to prevent tax evasion, promote fair taxation, update old regulations, and strengthen bilateral tax treaties.

Under the DTA, a Singapore company pays tax on its profits only in its home state, unless it conducts business in Australia through a permanent establishment (PE). Then, too, Australia can only tax profits attributable to the PE.

Furthermore, the DTA outlines the tax treatment of income from dividends, interest, royalties, and capital gains. It also makes provisions so companies aren't taxed twice on the same income and can reduce their tax liability through a foreign income tax offset.

Tax treatment of dividends: What are franking credits?

There is another provision under Australian tax laws to prevent double taxation. When a company pays company tax on its profits in Australia, it gives rise to the so-called franking credits. Franking credits are tax credits passed on from companies to shareholders along with dividend payments. The shareholders can use these credits to lower their personal income tax liability.

Some factors to take note of when using franking credits:

• Franking rate corresponds to the company's company tax rate in the previous financial year. If a company was a base entity in the last fiscal, it will frank dividends at 25% in the current fiscal year.
  
• Shareholders claiming franking credits must be tax residents of Australia and fulfil the holding period rule—hold the shares for at least 45 days around the date of dividend payment.
  
• From the 2024–25 income year (tax time 2025), the Australian Taxation Office may automatically refund franking credits to eligible individuals who meet strict criteria (including age, residency, holding history, and income thresholds). Others must still lodge a claim manually.
  
• While resident shareholders may use franking credits to offset their personal tax or receive a refund, non-resident shareholders generally can't claim franking credits. However, fully franked dividends paid to non-residents are typically exempt from Australian dividend withholding tax, which can still result in tax efficiency for foreign investors.
  

Historical tax rates and recent developments

From a high of 49% in 1986-88, Australia's corporate tax rate has steadily declined. From 2001 to 2017, when the two-tier tax system was introduced, there was a single corporate tax rate of 30%.

In recent years, the country has also implemented some significant tax reforms, including:

• Global minimum tax: Effective January 2024, Australian operations of multinational entities with a consolidated annual revenue of over EUR 750 million must pay a 15% global minimum tax. This minimum top-up tax is part of a larger reform: The adoption of the Global Anti-Base Erosion (GloBE) Rules by OECD countries.
  
• Instant asset write-off: The AUD 20,000 instant asset write-off, currently available to eligible small businesses, has been extended to 30 June 2026, subject to legislative conditions.
  
• Foreign Resident Capital Gains Withholding (FRCGW) Rules: These have been amended, and effective 2025, withholding tax on the purchase of assets in Australia by foreign investors is 15%, up from 12.5%. Additionally, the AUD 750,000 minimum property value threshold has been eliminated. These changes expand the scope of transactions subject to withholding at settlement, strengthening CGT compliance for foreign investors.
  

Other taxes to take note of

Apart from company tax and PAYG instalment tax, businesses with Australian operations are subject to the following taxes:

• Goods and services tax (GST): A 10% GST is levied on the sale of most goods and services in Australia. Companies with an aggregated turnover of AUD 75,000 or more per annum are required to register for GST.
  
• Withholding tax: Companies paying dividends, interest, royalties, and wages are required to withhold a portion of the amount and pay it as tax to the Australian Taxation Office. There are two types of withholding tax: PAYG Withholding on payments to local employees and Non-resident Withholding Tax on payments of dividends, interest, and royalties to entities outside Australia.
  
• Fringe benefits tax (FBT): Companies pay a 47% FBT on grossed-up taxable value of non-salary fringe benefits provided to employees (company cars, paid parking, low-interest loans).
  
• Payroll tax: States and territories levy a tax on payroll. While most states follow a harmonised tax legislation, some differences might persist between states. Non-resident companies are advised to be clear about the tax regulations in the state in which they operate.
  
• Customs duties: Certain imports invite customs duties of up to 5%, unless exempt under a free trade agreement.
  
• Excise duties: Alcohol, tobacco, fuel and petroleum attract excise duties.
  
• Wine equalisation tax: This is a federal tax imposed on wholesale wine at the rate of 29%, in addition to the 10% GST.
  
• Petroleum resource rent tax (PRRT): In addition to corporate income tax, businesses involved in offshore petroleum, oil and gas projects must pay PRRT.
  
• Other taxes: These include stamp duty, property tax, luxury car tax, and capital gains tax, which is paid as part of corporate income tax.
  

Tax compliance and registration

To pay corporate income tax in Australia, businesses must register for an Australian Business Number (ABN) with the Australian Business Register, apply for a Tax File Number (TFN) with the Australian Taxation Office, and establish a corporate tax account with the latter.

To ensure compliance, companies must:

• Know their applicable corporate tax rate: Do they qualify for the lower company tax rate for small businesses or fall under the full company tax rate?
  
• Remember filing deadlines: The common dates for certain entities are February 28 for small businesses and January 15 for others. For many companies lodging via an agent, the deadline can be as late as May 15.
  
• Understand reporting obligations, which include filing annual tax returns even if no taxable income was earned, and maintaining accurate records to claim allowable deductions and tax credits.
  
• Diligently pay their PAYG tax instalments as applicable (quarterly or monthly).
  
• Take advantage of tax concessions and DTA provisions, if applicable, to lower tax liability.
  
• Avoid delays in tax filing and tax payments or underpayment of tax, which attracts interest charges, penalties, and even prosecution in serious cases.
  

How Aspire supports your expansion into Australia

Expanding into Australia means managing taxes, cash flow, and cross-border payments with confidence. Aspire gives you the financial infrastructure to operate compliantly, control costs, and scale without unnecessary complexity.

That's where Aspire comes in. Our multi-currency account supports 30+ currencies across 130 countries, making global payments easy, quick, and efficient. The account is really simple to set up with a fully online application process and minimum documentation. No initial deposit and minimum balance requirement. It comes with many useful features, all of them aimed at taking your business places:

• Lowest FX rates in the market and competitive transfer fees
  
• Unlimited virtual corporate cards to ease cash flow and enable on-time payments
  
• Easy software integrations to sync all your accounts, with automatic and regular updates.
  

Frequently Asked Questions

How much tax do you pay as a company in Australia?

A company in Australia pays corporate income tax at the full rate of 30% or a concessional rate of 25%. It also has other tax obligations such as GST, fringe benefit tax, payroll tax, customs duties, and so on.

What is the corporate tax rate in Australia?

The standard corporate tax rate is 30%. However, businesses with an annual turnover below AUD 50 million can benefit from a reduced 25% rate.

Is Australia a heavily taxed country?

Australia has a relatively moderate tax-to-GDP ratio compared to other Organisation for Economic Cooperation and Development (OECD) countries. It ranks eighth from the bottom for tax collected relative to economy size, with tax revenue at 28% of GDP compared to the OECD average of 33%.

How to calculate company tax in Australia?

To calculate company tax, first determine your taxable income, which is total income minus allowable deductions. To this, apply the applicable company tax rate.

What is the tax treatment of dividends in Australia?

Australia provides franking credits on franked dividends. When companies give away some of their after-tax profits to shareholders as dividends, they pass on the franking credits too. The shareholders can use these tax credits to lower their personal income tax.

What is the penalty for paying less tax in Australia?

Tax underpayment attracts interest charges and a shortfall penalty, which ranges from 25% of the shortfall (if it is considered a careless mistake) to 75% (if it's considered deliberate).