How to find the current company tax rate

Why you need the rate for a specific income year

If you are looking up "company tax Australia rate", you are rarely after a single headline number. You usually need one number for one income year, because that number feeds your company tax return, your PAYG instalments and, if you pay dividends, your franking credits.

The practical complication is that Australia does not have one flat company tax rate that applies to every company in every year. The Australian Taxation Office (ATO) publishes a full company tax rate and a lower company tax rate, and which one applies depends on the income year and on whether your company is a base rate entity for that year. Eligibility has also changed over time. That is why the reliable approach is to confirm the rate against the ATO's own company tax rate page rather than relying on a figure quoted in an article, a forum post or last year's lodgement.

The two rates, as published by the ATO

According to the ATO's guidance on changes to company tax rates:

The ATO states that the full company tax rate of 30% applies to all companies that are not eligible for the lower company tax rate. It also states that from the 2021–22 income year onwards, companies that are base rate entities must apply the 25% company tax rate.

Two details matter when you read that table:

• The lower rate is assessed year by year. Eligibility depends on whether you are a base rate entity, and the ATO frames that test as applying from the 2017–18 income year onwards.
• The rules have moved. The ATO notes that the lower company tax rate and the eligibility requirements have changed in recent years. So the rate that applied to an earlier income year is not automatically the rate for the year you are lodging now.

This guide does not restate the base rate entity turnover or income tests, because those details sit in the ATO's own material and can be amended. Read them on the ATO page rather than second-hand.

What to check on the ATO page

The ATO's "company tax rate changes" page is the primary source. It covers when to apply the lower company tax rate, how to work out franking credits when you do, and the progressive changes to the company tax rate over earlier income years.

Use it for three things:

1. The rate for the exact income year you are lodging, not the current financial year by default.
2. The base rate entity test as it applies to that year.
3. The franking credit treatment that follows from the rate you apply.

If your company's circumstances changed mid-year, or your aggregated turnover moved close to a boundary, treat the base rate entity question as the part that needs care rather than the rate itself.

Cross-check with business.gov.au

business.gov.au's income tax for business page gives the plain-language summary: the full company tax rate is 30% and the lower company tax rate is 25%, and it notes that the lower company tax rate and eligibility requirements have changed in recent years. It is a useful second read if the ATO wording is dense, and it points back to the ATO for detail on income and deductions for business owners.

The page also sits alongside the ATO's PAYG material: business.gov.au notes that PAYG instalments help you avoid a large tax bill after you lodge your tax return. If your instalments were calculated on the wrong rate, the shortfall or overpayment shows up at lodgement.

Resident and non-resident companies

If your company has any foreign ownership or foreign income, the rate question is not the only question. Austrade's investor guide on Australian taxes sets out the basics:

• An Australian resident company is subject to company tax.
• A non-resident company is taxed on its Australian source income.
• Most major business taxes, including income tax, are collected by the Australian Government.
• Australia holds a number of tax treaties with other nations, which stop double taxation of foreign entities operating in Australia.
• There may be other Australian Government and state and territory government taxes relevant to certain business activities.

So a foreign-owned or foreign-operating company needs two confirmations: the company tax rate that applies, and whether a tax treaty changes how the income is taxed. The ATO page covers the rate; treaty questions are a separate check, and they are the point at which a registered tax agent earns their fee.

A checklist for confirming the rate yourself

• Identify the income year you are lodging for. Write it down before you open any page.
• Open the ATO's company tax rate changes page and read the section for that income year.
• Work out whether the company is a base rate entity for that year, using the ATO's current test.
• Note the resulting rate: 25% if you are a base rate entity for 2021–22 onwards, otherwise 30%.
• Cross-check the summary on business.gov.au's income tax for business page.
• If the company is foreign-owned or earns foreign income, confirm residency status and Australian source income, and check whether a treaty applies.
• Check that PAYG instalments were set using the same rate you are about to apply.
• Check the franking credit calculation if dividends were paid.
• Record the date you checked and the page you used, so the figure is auditable later.

Questions worth putting to your tax agent

These are the points where a published rate does not resolve the question on its own:

• Is this entity actually a company for tax purposes, or is it a trust or partnership with different treatment?
• Was the company a base rate entity for this income year, and has that status changed from last year?
• If aggregated turnover shifted during the year, does the ATO's test still give the same answer?
• Does a tax treaty apply to any foreign income or foreign shareholder?
• Are any state or territory taxes relevant to this business's activities?
• Were PAYG instalments varied on the correct rate?

Next step

Confirm the rate on the ATO's company tax rate changes page for the income year you are lodging, then cross-check it against business.gov.au. Save or screenshot both, with the date. If you are confirming the rate because a lender has asked for company financials as part of a business or investment property loan application, the home loan section at /money/home-loans/ covers related borrowing questions.

General information only

This article is general information about Australian company tax rates as published by the ATO, business.gov.au and Austrade at the date shown. It is not legal, tax, accounting or financial advice, and it does not account for your company's circumstances. Company tax settings, eligibility tests and rates can change, and different income years can produce different answers. Confirm the current position with the ATO or a registered tax agent before you lodge, set instalments or calculate franking credits. Australian Ltd is not the ATO, a government body, a regulator, a lender or a comparison service, and nothing here should be read as a recommendation of any product or provider.