Australia company taxes

Company tax: the 25% vs 30% two-tier system

Australia has no state corporate income tax — there is a single federal company tax. A company is a 'base rate entity' and pays 25% if its aggregated turnover is below A$50 million and no more than 80% of its assessable income is 'base rate entity passive income' (interest, dividends, rent, royalties, net capital gains). Companies that fail either test pay the 30% standard rate. The practical sting for non-residents is the passive test: a pure holding or investment company whose income is mostly dividends or interest can be pushed to 30%, while an active trading or services company usually keeps the 25% rate.

GST and the A$75,000 threshold

GST is a 10% value-added tax. A company must register once its GST turnover reaches — or is reasonably expected to reach — A$75,000, and registration must be done within 21 days of crossing it. Below the threshold registration is voluntary. Once registered, you charge 10% GST on taxable Australian supplies, claim input-tax credits on Australian business costs, and lodge a Business Activity Statement (BAS), generally quarterly. A non-resident-owned company that mainly sells services to overseas customers may make GST-free supplies, but should still consider voluntary registration to recover GST on local expenses.

Dividends, franking and withholding for foreign owners

Australia's imputation system is central to how a foreign owner is taxed on distributions. When the company pays tax on its profits, that tax can be 'franked' onto dividends. A fully franked dividend paid to a non-resident shareholder is exempt from dividend withholding tax — 0% — because Australian tax has already been paid at the company level. Only the unfranked portion attracts withholding, at a default 30%, typically reduced under a double-tax treaty (often to 15% or less, sometimes 0% for qualifying intercorporate holdings). Interest paid offshore is generally subject to 10% withholding and royalties to 30%, both treaty-reducible.

How a non-resident-owned company is taxed

Because the company is incorporated in Australia it is an Australian resident and is taxed on worldwide profits — your living overseas does not shift the tax base offshore. This is the mirror image of a non-resident company, which Australia taxes only on Australian-source income (and, under a treaty, generally only on profits attributable to an Australian permanent establishment). So an Australian Pty Ltd does not become a low-tax offshore vehicle just because its owner is abroad; if you also run genuine operations in another country, that can create a foreign permanent establishment and split the profit between jurisdictions.

Losses, concessions and incentives

Company tax losses can generally be carried forward indefinitely to offset future profits, subject to integrity tests (the continuity-of-ownership test or, failing that, the same-business / similar-business test). Australia offers a substantial R&D Tax Incentive — a refundable offset for eligible smaller companies and a non-refundable offset for larger ones — and various small-business concessions. These are available to a foreign-owned company on the same terms as a domestic one, provided the eligible activity genuinely occurs in Australia and is properly documented.

Filing calendar

The company income-tax return is lodged annually with the ATO; a company that lodges its own return for the year ended 30 June is commonly due by 28 February (or 31 October if it has prior-year returns outstanding), while companies on a registered tax agent's program get later, staggered dates. GST-registered companies lodge a BAS, usually quarterly, with PAYG instalments often paid alongside. Separately, ASIC issues an Annual Review each year on the registration anniversary (fee A$329) — a corporate, not tax, obligation — and late payment triggers automatic ASIC penalties.