What is the company tax rate in Australia 2026?
For the 2026 income year, the company tax rate in Australia is 25% for base rate entities with an aggregated turnover under $50 million and passive income below 80%. All other companies pay the general corporate tax rate of 30%.
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How it works in practice
Understanding Australian Company Tax Rates
Australia operates a two-tiered company tax rate system. For the 2026 income year, a lower tax rate applies to "base rate entities," while a higher general rate applies to all other companies. This distinction is primarily based on a company's aggregated turnover and the nature of its income.
Base Rate Entity Tax Rate
The reduced company tax rate for base rate entities is 25%. To qualify as a base rate entity for the 2026 income year, your company must have an aggregated turnover of less than $50 million. Additionally, 80% or less of your company's assessable income must be 'passive income', such as interest, royalties, rent, or dividends. Most active trading businesses below the turnover threshold will qualify for this lower rate.
General Company Tax Rate
Companies that do not meet the criteria for a base rate entity pay the general company tax rate of 30%. This typically includes larger companies with an aggregated turnover of $50 million or more, or companies with a significant proportion of passive income, regardless of their turnover. It is crucial for businesses to correctly identify which rate applies to them to ensure accurate tax calculations and compliance.
Important exceptions
The company tax rates are subject to change through future legislative amendments; while currently set for 2026, government policy can always evolve. The definition of 'aggregated turnover' includes the turnover of entities connected with or affiliated with the company, not just the company itself. The 80% passive income threshold for base rate entities is critical; exceeding it means the 30% rate applies, regardless of turnover. Specific tax concessions or rules may apply to certain industries or entity types.
What you should do now
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Determine your company's aggregated turnover for the 2025-2026 income year.
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Calculate the percentage of your company's assessable income that is passive income.
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Apply the 25% base rate entity tax rate if your turnover is under $50 million and passive income is 80% or less.
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Use the 30% general company tax rate if your company does not meet the base rate entity criteria.
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Consult with a registered tax agent or the ATO directly for complex situations or to confirm your eligibility.
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