What is the company tax rate in Australia for 2026–27?

There are two rates. Base rate entities — companies with aggregated turnover under $50 million and no more than 80% passive income — pay 25%. All other companies pay the standard 30%. Eligibility is tested each year.

What are franking credits?

When a company pays tax, it generates franking credits attached to dividends. Shareholders gross up the dividend by the credit, are taxed at their marginal rate, then subtract the credit — so company tax already paid isn't taxed twice. Excess credits can be refunded. At 25% the credit is one-third of the dividend; at 30% it is 30/70ths.

Is profit taxed twice in a company?

Not fully. The company pays 25% or 30%, and when profit is distributed the shareholder pays at their marginal rate — but Australia's imputation system gives a franking credit for the company tax already paid, so only the gap between the two rates is paid as top-up tax (and low earners can get a refund).

Is there a state company tax in Australia?

No. Company tax is federal and applies across all states and territories. Companies pay it through quarterly PAYG instalments and an annual company tax return.

Australia · 2026–27 financial year

Australia Company Tax Calculator

Two rates: 25% for a base rate entity, 30% for everyone else. Then see how dividend imputation works — the franking credits that stop company profit being taxed twice when it reaches shareholders.

The company

Revenue

Deductible expenses COGS, wages, rent, depreciation…

Taxable profit$0

Company tax rate

25% applies if aggregated turnover < $50m and ≤80% of income is passive (interest, dividends, rent, royalties, capital gains). Otherwise 30%.

Distribute after-tax profit as a fully franked dividend

Shareholder's other taxable income Sets the marginal rate on the grossed-up dividend

Shareholder has private hospital cover

Company tax

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— effective on profit · — company rate

Kept – Company tax –

Taxable profit$0

Company tax (25%)$0

After-tax profit$0

After-tax profit

Company tax

Effective rate

Franking rate

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How company tax works in Australia

A company is a separate taxpayer with a flat rate on its taxable profit — no tax-free threshold, no brackets. There are two rates for 2026–27: 25% for a base rate entity and 30% for everything else. To get the 25% rate a company must pass both tests for the year: aggregated turnover under $50 million, and no more than 80% of its assessable income being passive (interest, dividends, rent, royalties, capital gains). There's no state company tax — it's federal, paid via quarterly PAYG instalments.

Franking credits — why profit isn't really taxed twice

When the company pays tax it banks franking credits. Pay a dividend and those credits ride along. The shareholder grosses up — adds the credit back to the cash dividend — is taxed at their marginal rate on the total, then subtracts the credit. So the company tax already paid is handed back; only the gap between the company rate and the shareholder's marginal rate is paid as top-up. A shareholder whose marginal rate is below the company rate gets the excess refunded.

The franking maths

The credit is the company tax attached to the cash dividend: at the 25% rate that's one-third of the dividend (25/75); at 30% it's 30/70ths, about 42.9%. Note that your franking rate is generally set by the previous year's status, a subtlety this estimate sets aside by franking at your selected current rate.

Frequently asked questions

Which rate does my company pay?

If aggregated turnover is under $50m and 80% or less of income is passive, it's 25%. Cross either threshold and the whole year's profit is taxed at 30%. Most owner-managed trading companies qualify for 25%; investment-heavy companies often fail the passive-income test.

What does "fully franked" mean?

A dividend is fully franked when the company attaches the maximum franking credit — i.e. it's paid from profits on which company tax was already paid. Shareholders then receive credit for that tax. Dividends can also be partly franked or unfranked.

Is taking a salary better than a dividend?

A salary is deductible to the company (reducing its tax) but taxed as income to you with super on top; a dividend comes from after-tax profit but carries franking credits. The best mix depends on your marginal rate — many owners use a blend. This tool shows the dividend side.

Can franking credits be refunded?

Yes. If your franking credits exceed your tax on the grossed-up dividend — common for low-income or super-fund shareholders — the excess is refunded. In that case the top-up line below shows as a refund.

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Australia sole trader

The unincorporated path

Australia capital gains

Educational estimate — not tax advice. Australia 2026–27 (ATO): company tax is a flat 25% for base rate entities (aggregated turnover < $50m and ≤80% base rate entity passive income) or 30% otherwise. Franking credit on a fully franked dividend = dividend × rate/(1−rate): one-third at 25%, 30/70ths at 30%. The shareholder calculation grosses up the dividend, applies resident marginal rates plus the 2% Medicare levy, and offsets the franking credit (excess refundable). It assumes a fully franked distribution of all after-tax profit, franks at the selected current-year rate (real franking usually follows the prior year), and excludes losses, R&D incentives, Division 7A, and PAYG instalment timing. Confirm with the ATO or a registered tax agent.