Australia

Corporate - Taxes on corporate income

Last reviewed - 18 December 2020

Companies that are residents of Australia are subject to Australian income tax on their worldwide income. Generally, non-resident companies are subject to Australian income tax on Australian-sourced income only. However, where a company is resident in a country with which Australia has concluded a double taxation agreement (DTA), Australia's right to tax business profits is generally limited to profits attributable to a permanent establishment (PE) in Australia.

All companies are subject to a federal tax rate of 30% on their taxable income, except for ‘small business’ companies, which are subject to a reduced tax rate of 26% for the current 2020/21 income year, reducing to 25% from the 2021/22 income years (27.5% up to and including the 2019/20 income year). The reduced tax rate applies only to those companies that, together with certain 'connected' entities, fall below the aggregated turnover threshold of AUD 50 million (AUD 25 million for the 2017/18 income year).

Integrity measures also ensure that a company will not qualify for the reduced rate unless the specifically defined passive income (including, among other things, interest, rents, and net capital gains) that it derives represents no more than 80% of its total assessable income for the year. 

Local income taxes

There are no state or municipal taxes on income in Australia.