How corporate tax works in Australia
Australian-resident companies are generally taxed on worldwide income. The company tax rate is 25% for base-rate entities that meet the aggregated-turnover and passive-income tests, and 30% for other companies.
Australia uses an imputation system. Company tax paid can generate franking credits that attach to dividends and reduce double taxation at the shareholder level when the credits are available and usable.
Large multinationals still face thin-cap style interest limitation, transfer pricing, CFC rules and public CbC or minimum-tax developments depending on group size. GST, payroll tax and state taxes often matter as much as the federal company rate for operating businesses.
Tax rates at a glance
- Base-rate entity rate
- 25%If eligible
- General company rate
- 30%
- Franking credits
- Available
- GST
- 10%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FoundersOperating companiesInvestorsHolding companiesCross-border groups
Watch out for
- Not every small company automatically gets 25%. Base-rate entity status depends on turnover and the mix of passive income.
- Division 7A can treat some payments, loans or forgiven debts to shareholders as taxable dividends.
- State payroll tax thresholds and land tax can change location decisions inside Australia.
- Franking is valuable, but foreign shareholders and loss-making years can limit the practical benefit.
Frequently asked questions
What is Australia’s company tax rate?
Qualifying base-rate entities generally pay 25%. Other companies generally pay 30%.
Does Australia tax companies on worldwide income?
Resident companies are generally taxed on worldwide income, subject to foreign income tax offsets and specific exemptions or participation rules.
How do franking credits work?
Tax already paid at company level can attach to dividends as franking credits, which shareholders may use to reduce their own tax when eligible.