Quick answer
- 25% is the company tax rate for base rate entities: companies with aggregated turnover under $50 million and no more than 80% of assessable income from passive sources.
- 30% is the rate for every other company.
- The rates are the same as last year. They have applied since 2021-22 and continue for 2026-27.
- Base rate entity status is tested each year, using that year’s turnover and income, so a company can move between rates.
- The rate you frank dividends at uses the previous year’s figures, so it can differ from the rate you pay tax at in the same year.
- Most small companies using a tax agent lodge their 2025-26 return by 15 May 2027.
What you’ll learn:
- Who qualifies for the 25% rate and who pays 30%
- How the $50 million turnover test and 80% passive income test work
- How franking credits work under the two rates
- Company tax return and PAYG instalment due dates for 2026-27
- What’s changed for companies in 2026-27, including the permanent $20,000 instant asset write-off
Australia has two company tax rates, and which one applies to your company can change from year to year. Getting it wrong affects both the tax your company pays and the franking credits your shareholders receive.
This guide covers the rates for the 2026-27 income year (1 July 2026 to 30 June 2027), along with the due dates for 2025-26 company returns being lodged now.
Company tax rates for 2026-27
The ATO’s company tax rates have been stable since 2021-22:
| Company type | Aggregated turnover | Tax rate |
|---|---|---|
| Base rate entity | Under $50 million, and passive income no more than 80% of assessable income | 25% |
| All other companies | $50 million or more, or passive income above 80% | 30% |
The ATO applies the same settings to 2025-26 and 2026-27. For earlier years, the base rate entity rate was 27.5% (to 2019-20) and 26% (2020-21).
Who qualifies as a base rate entity?
A company is a base rate entity for an income year if it passes both tests for that same year.
Test 1: aggregated turnover under $50 million
Aggregated turnover is your company’s annual turnover plus the turnover of any entities connected with it or affiliated with it. That includes related companies, trusts and, in some cases, overseas entities. Many companies that look small on their own fail this test once related entities are counted.
Test 2: no more than 80% passive income
No more than 80% of the company’s assessable income can be base rate entity passive income (BREPI). Under the ATO’s definition, BREPI includes:
- dividends and other corporate distributions, plus the franking credits attached to them (excluding non-portfolio dividends, where the company holds at least 10% of the voting power)
- interest, with some exceptions
- rent and royalties
- net capital gains
- gains on qualifying securities
- trust or partnership distributions, to the extent they come from the types of income above
Example
A company runs a chain of cafés with $8 million in sales and also owns property earning $3 million in rent. Its passive income is $3 million of $11 million total assessable income, or about 27%. With turnover under $50 million and passive income well under 80%, it pays 25%.
A company that mainly holds investment properties or shares is a different story. If 80% or more of its income is rent, interest or dividends, it pays 30% even if its turnover is small. This catches many investment and “bucket” companies.
Franking credits under the two rates
When a company pays a franked dividend, shareholders receive franking credits for the company tax already paid. The maximum franking rate depends on the company’s corporate tax rate for imputation purposes.
That rate isn’t simply the rate the company pays tax at this year. Under the ATO’s rules, you work it out by assuming the company’s aggregated turnover, assessable income and passive income will be the same as in the previous income year. The company uses 25% if:
- last year’s aggregated turnover was under $50 million and no more than 80% of last year’s assessable income was passive, or
- the company didn’t exist last year.
Otherwise, it franks at 30%.
This can create a mismatch. A company that pays tax at 30% this year but qualified as a base rate entity last year can only frank at 25%. The reverse also happens: a company that pays 25% this year but didn’t qualify last year franks at 30%, which can leave its franking account in deficit.
Shareholders generally need to hold shares “at risk” for at least 45 days around the dividend to claim franking credits. Individuals with total franking credits of $5,000 or less in a year are exempt from this rule.
Company tax return due dates
Companies that use a registered tax agent lodge under the ATO’s registered agent lodgment program. For 2025-26 returns of companies that balance on 30 June, the main dates are:
| Company situation | Lodgment due date |
|---|---|
| One or more prior-year returns still outstanding at 30 June 2026 | 31 October 2026 |
| Large and medium companies whose 2025 return was taxable | 31 January 2027 |
| Large and medium companies whose 2025 return was non-taxable, and new large and medium registrants | 28 February 2027 |
| Companies with total income over $2 million in an earlier year, unless due earlier | 31 March 2027 |
| All remaining companies on an agent’s client list, including most small companies | 15 May 2027 |
There’s also a 5 June 2027 concession for companies due 15 May whose current and previous returns are both non-taxable or result in a refund.
If your company lodges without an agent, the dates are generally earlier, so check your company’s due date with the ATO.
Payment: if you lodge on time, payment for most companies is due on the later of 21 days after the lodgment due date or 21 days after the notice of assessment is deemed received. If you lodge late, payment is due 21 days after the lodgment due date, so lodging late doesn’t buy more time to pay. Large and medium companies that were taxable in the prior year pay by 1 December 2026.
Late lodgment attracts a failure to lodge penalty of $364 per 28 days for small companies (up to $1,820) from 1 July 2026, and more for medium and large companies. Our tax deadlines guide has the full penalty table.
PAYG instalments
Most profitable companies pay tax during the year through PAYG instalments.
According to the ATO, a company automatically enters PAYG instalments if its latest return shows instalment income of $2 million or more, its estimated (notional) tax is $500 or more, or it’s the head company of a consolidated group.
Quarterly instalments are due on these dates:
| Quarter | Due date |
|---|---|
| July to September | 28 October |
| October to December | 28 February |
| January to March | 28 April |
| April to June | 28 July |
If you lodge online, you may get an extra two weeks. Businesses with instalment income over $20 million pay monthly, by the 21st of the following month.
You can vary your instalments if you expect lower income, but if your varied instalments come to less than 85% of the tax you end up owing, the ATO can charge general interest on the shortfall.
What’s changed for companies in 2026-27
$20,000 instant asset write-off is now permanent. Small businesses with aggregated turnover under $10 million can immediately deduct eligible assets costing less than $20,000, per asset. The ATO confirms the $20,000 threshold is now permanent from 1 July 2026, after earlier year-by-year extensions. Assets of $20,000 or more go into the small business pool.
Payday Super has started. From 1 July 2026, employers must pay super at the same time as wages, rather than quarterly. The ATO’s announcement that Payday Super is now law covers what employers need to do. This is a cash flow change for any company with staff.
Higher penalties. The Commonwealth penalty unit rose from $330 to $364 on 1 July 2026, which flows through to failure to lodge penalties and other administrative penalties.
Global minimum tax. Large multinational groups with annual revenue of at least €750 million face a 15% global and domestic minimum tax. This doesn’t affect most private companies.
For a wider look, see our guide to small business tax changes for 2026-27.
Common mistakes
- Ignoring connected entities in the turnover test. Turnover from related companies and trusts counts toward the $50 million threshold.
- Overlooking the passive income test. If trading income drops in a year, passive income can push past 80% and the company moves to 30%.
- Franking at the wrong rate. Remember the franking rate uses last year’s figures.
- Underestimating instalments. Varying instalments too low can lead to interest charges.
- Poor records. The ATO matches data from banks, share registries and other sources, so income needs to be recorded accurately.
Getting the structure right
The two-rate system is one reason company structures need regular review. Whether a company suits your business depends on more than the tax rate: how you plan to take money out of your company, how profits will be distributed, and what other entities are in the group all matter.
ITP’s business tax accountants can confirm which rate applies to your company, set up your franking correctly and keep your lodgments on track. You can also read about company tax returns and choosing a business structure, or find your nearest ITP office.
FAQs: company tax rates
What is the company tax rate in Australia for 2026-27?
25% for base rate entities, which are companies with aggregated turnover under $50 million and no more than 80% passive income. All other companies pay 30%. These rates are unchanged from 2025-26.
Can a company with investment properties get the 25% rate?
Yes, as long as its aggregated turnover is under $50 million and no more than 80% of its assessable income is passive income such as rent, interest and dividends. A company that earns mostly rent or investment income pays 30%.
What happens if turnover goes over $50 million partway through the year?
The test uses aggregated turnover for the whole income year. If the company’s turnover for the year is $50 million or more, it pays 30% for that year.
What rate do I frank dividends at?
You work out the franking rate assuming the company’s turnover, assessable income and passive income are the same as the previous year. If the company qualified as a base rate entity on last year’s figures, or didn’t exist last year, it franks at 25%. Otherwise it franks at 30%.
When is my company tax return due?
Most small companies on a tax agent’s client list lodge their 2025-26 return by 15 May 2027. Earlier dates apply to large and medium companies, companies with overdue prior-year returns, and companies with total income over $2 million.
Is the $20,000 instant asset write-off still available?
Yes. From 1 July 2026 the $20,000 threshold is permanent for small businesses with aggregated turnover under $10 million. It applies per asset.
Disclaimer: This article provides general information about Australian company tax rates and isn’t personal tax advice. Your company’s rate and due dates depend on its circumstances and connected entities. Always check the latest ATO guidance or speak with a registered tax agent about your situation. ITP Accounting Professionals disclaims any liability for decisions made based solely on the general information in this article.