Company Tax Rate Australia: Business Tax Guide

The company tax rate in Australia is 25% for base rate entities (companies with aggregated annual turnover under $50 million that are primarily active businesses) and 30% for all other companies. These have been the rates since 2021-22 and are unchanged for 2025-26. Sole traders and partnerships are taxed at personal marginal rates, which range from 0% to 45% plus a 2% Medicare Levy.

Beyond income tax, Australian businesses pay a range of other taxes depending on their structure, size, and activities: GST (10%), Fringe Benefits Tax (47%), Capital Gains Tax, payroll tax (state-administered), and the Super Guarantee (12% from 1 July 2025). Understanding each of these, and how they interact, is foundational to managing a business’s tax position.

This guide covers every major Australian business tax for 2025-26, with current rates, who pays them, and the key rules that apply. For a personalised assessment of your business’s tax position, The Kalculators provides small business tax return services and business advisory services in Adelaide.

Australian Business Tax Rates at a Glance

Company Income Tax: 25% vs 30%

The income tax rate a company pays depends on whether it qualifies as a base rate entity (BRE):

Base Rate Entity (25% Tax Rate)

A company pays the 25% tax rate if, for that income year:

• 
  Aggregated turnover: the company’s aggregated annual turnover is less than $50 million
• 
  Passive income test: no more than 80% of the company’s assessable income is base rate entity passive income (dividends, interest, royalties, rent, net capital gains, and similar passive sources

This passive income test prevents holding companies and investment companies from accessing the lower 25% rate. An operating business that earns most of its income from genuine business activities will generally qualify. A company that primarily holds investments may not. The full rules are on the ATO company tax rates page.

Standard Rate (30% Tax Rate)

Companies that do not meet the base rate entity tests pay 30% income tax on their taxable income. This applies to companies with aggregated turnover of $50 million or more, companies whose passive income exceeds 80% of assessable income, and non-resident companies on their Australian-sourced income.

PAYG Instalments for Companies

Companies generally pay their estimated income tax liability quarterly through the PAYG instalment system. The ATO calculates an instalment amount based on the company’s most recent tax return, or the company can use the instalment rate method based on actual income. Instalments prevent large lump-sum tax bills at year end and help businesses manage cash flow across the year.

Tax Losses for Companies

A company that has allowable deductions exceeding its assessable income for a year incurs a tax loss. Tax losses can be carried forward indefinitely and offset against future taxable income. However, a company can only apply a prior-year tax loss if it satisfies either the continuity of ownership test (the same group of shareholders hold more than 50% of voting rights and rights to income and capital distributions) or the same business test (the company is carrying on the same business it was carrying on when the ownership change occurred).

Income Tax for Sole Traders and Partnerships

Sole traders and partners in partnerships are taxed on their business income at their personal marginal income tax rates. The business does not pay tax separately; instead, the business profit is added to all other income and taxed through the individual’s tax return.

2025-26 individual income tax rates (applied after the tax-free threshold):

Goods and Services Tax (GST)

GST is a 10% tax on most taxable supplies of goods and services in Australia. If your business has a GST turnover of $75,000 or more per year, you must register for GST. Taxi and rideshare operators must register regardless of their turnover. Non-profit organisations must register once their GST turnover reaches $150,000.

Businesses registered for GST charge GST on their taxable sales and can claim input tax credits for the GST included in the price of their business purchases. The net amount (GST charged minus GST credits) is reported and paid via the Business Activity Statement (BAS).

Not all supplies attract GST. Key GST-free supplies include: most basic food, medical services, education, childcare, residential accommodation, and exports. Input taxed supplies (which do not attract GST but also cannot claim credits) include financial services and residential rent.

The BAS reports quarterly for most businesses (due 28 October, 28 February, 28 April, and 28 July) or monthly for larger businesses. See our complete BAS guide for the full lodgment process.

PAYG Withholding

If your business has employees, you must deduct income tax from their wages, salaries, and other payments, and remit those amounts to the ATO. This is PAYG withholding. The amount to withhold is calculated using the ATO’s tax withholding tables, which are based on each employee’s income and tax declaration (including whether they claim the tax-free threshold and whether they have a HECS-HELP debt).

PAYG withholding is reported through Single Touch Payroll (STP Phase 2) at the time of each payrun and included in the business’s BAS for the relevant period. The employer is responsible for ensuring the correct amount is withheld and remitted. Failure to withhold or remit correctly creates a personal liability for company directors in certain circumstances.

Capital Gains Tax (CGT)

CGT is not a separate tax in Australia. Capital gains are included in your assessable income and taxed at your income tax rate (for individuals and trusts) or the company tax rate (for companies). However, specific concessions and discounts make CGT significantly different from ordinary income in many cases.

CGT Discount

Individuals and trusts that have held a capital asset for more than 12 months are eligible for a 50% CGT discount on the net capital gain. This effectively halves the taxable gain. Companies are not eligible for the 50% discount. Companies include the full capital gain in assessable income.

Small Business CGT Concessions

Eligible small business owners (turnover under $2 million or net assets under $6 million) may access four CGT concessions when selling a business or business assets:

• 
  15-year exemption: if you have owned an active asset for at least 15 years and are aged 55 or over retiring, or permanently incapacitated, the entire capital gain is exempt.
• 
  50% active asset reduction: reduces the capital gain by 50% if the asset was an active asset of the business. Can be combined with the 50% individual discount for an effective 75% reduction in the gain.
• 
  Retirement exemption: up to $500,000 lifetime cap of capital gains can be exempt if the proceeds are contributed to super (or if you are under 55, they must be contributed to super).
• 
  Rollover: defer CGT when you sell a business and acquire a replacement active asset within 2 years.

These concessions require careful planning and specific eligibility conditions. For personalised CGT advice, see our capital gains tax services in Adelaide.

Fringe Benefits Tax (FBT)

FBT is a tax paid by employers on non-cash benefits provided to employees (and their associates). The FBT rate is 47%, applied to the grossed-up taxable value of the benefits. The FBT year runs from 1 April to 31 March (different from the income tax year). FBT returns are lodged and tax paid annually.

Common fringe benefits that attract FBT:

• 
  Company cars used for private purposes: the most common FBT trigger. Business travel is exempt; personal travel in a company vehicle is a fringe benefit.
• 
  Loans to employees at below-market rates: the difference between the ATO’s benchmark interest rate and the actual rate charged is a fringe benefit.
• 
  Entertainment: meals, events, and corporate entertaining provided to employees generally attract FBT unless exempt.
• 
  Salary packaged items: unless exempt (such as work-related portable electronic devices or in-house residual benefits).

Some benefits are FBT-exempt regardless of value: work-related items including laptops, briefcases, calculators, and tools of trade used primarily for work. Certain benefits provided through salary sacrifice arrangements for eligible employees at hospitals and public benevolent institutions have concessional FBT treatment.

Payroll Tax (State-Based)

Payroll tax is administered by each state and territory independently, not by the ATO. It is a tax on wages paid by an employer once total wages exceed the state’s annual threshold. Unlike the Super Guarantee, payroll tax is not a deduction from the employee’s pay; it is a cost borne entirely by the employer.

For Adelaide businesses, the relevant jurisdiction is South Australia:

Grouping rules: if you have related companies or related entities, the ATO’s grouping rules mean their combined wages are assessed against the threshold, not each entity separately. This prevents threshold duplication across a corporate group.

Stamp Duty on Business Transfers

Stamp duty (also called transfer duty) is a state and territory tax on the transfer of assets, including business assets. When you buy a business, stamp duty may apply to the transfer of real property, business goodwill, equipment, and other dutiable property depending on your state.

South Australia stamp duty: South Australia abolished stamp duty on the transfer of business assets (other than real property) from 2018. Stamp duty on real property transfers still applies. If your business sale or purchase includes real property in SA, stamp duty is calculated on the property’s dutiable value at the applicable rate.

If your business operates across multiple states, stamp duty obligations may arise in each state where dutiable assets are located. Contact your state or territory revenue authority for current rates and exemptions.

Tax Implications of Selling a Business in Australia

Selling a business is one of the most tax-significant events in a business owner’s life.

The key taxes that arise on a business sale are:

• 
  CGT on goodwill and active assets: goodwill is a capital asset. The gain on sale of goodwill is a CGT event. Small business CGT concessions (outlined above) may reduce or eliminate the taxable gain for eligible sellers.
• 
  GST on business sale: the sale of a going concern (a business capable of being carried on as an ongoing business) is GST-free if both parties are registered for GST and the transaction is properly structured. Selling individual assets may attract GST. Structuring is critical.
• 
  Income tax on trading stock: if the sale includes trading stock, the proceeds may be assessable as ordinary income rather than capital. The distinction between trading stock and capital assets matters significantly for tax treatment.
• 
  Stamp duty: on any real property included in the sale (state-administered).

The tax outcome of a business sale can vary dramatically depending on structure, timing, and whether small business CGT concessions apply. This is an area that requires specialist planning before the sale is agreed, not after. Our business advisory team works with business owners planning exits to maximise the available concessions.

Key Tax Changes Affecting Australian Businesses in 2025-26

• 
  Super Guarantee permanently at 12%: from 1 July 2025, the SG rate reached its final legislated level of 12%. No further increases are scheduled. All employers must ensure payroll is configured at 12%.
• 
  GIC no longer deductible: from 1 July 2025, General Interest Charge on overdue ATO liabilities is no longer a deductible business expense. This makes late ATO payments significantly more expensive.
• 
  Payday super from 1 July 2026: not a 2025-26 change but one that businesses must prepare for in the current year. Super remittance moves from quarterly to per-payrun.
• 
  $20,000 instant asset write-off through 30 June 2026: the temporary $20,000 threshold continues. The government has proposed making it permanent from 1 July 2026 but this has not yet passed as law.
• 
  2026 Budget negative gearing changes: for residential investment properties purchased after 7:30pm AEST on 12 May 2026, losses can only offset rental income from 1 July 2027. This affects business owners who hold investment properties personally.

How The Kalculators Can Help With Your Business Tax

Our registered tax agents work with businesses across all structures: sole traders, companies, trusts, and partnerships. We prepare your annual business tax return, advise on the optimal structure for your tax position, and manage the quarterly BAS lodgment cycle.

We also provide year-end tax planning: reviewing your deductions, assessing your eligibility for the instant asset write-off, advising on voluntary super contributions, and ensuring your business structure remains optimal as your revenue grows. For businesses approaching the $50 million turnover mark or a business sale, the structuring decisions required are particularly significant.

Our business expense tracking guide covers the deductions your business can claim in 2025-26.

Call (08) 7480 2593, Monday to Friday, 9:00 AM to 6:00 PM. Offices at 182 Salisbury Highway, Salisbury; 315 Prospect Road, Blair Athol; and 280 Main South Road, Morphett Vale. Online services for Murray Bridge, Woodville, Melrose Park, Port Augusta, Prospect, and Brighton via info@thekalculators.com.au.