Corporate Income Tax in Australia: A Complete Guide (2025)

When expanding their market abroad, businesses often pay special attention to the tax regulations of the country where the company is established. 

In order to help businesses have an overview of the corporate income tax system in Australia, GLA's article will provide businesses with basic information about tHue for companies established in Australia.

1. Overview of corporate income tax in Australia

The corporate income tax (“CIT”) system plays an important role in shaping the business environment in Australia.

This is the main source of government revenue and directly affects all types of businesses, from small businesses to multinational corporations. Therefore, understanding the structure, tax rates and compliance requirements is crucial for businesses operating or looking to expand into the Australian market.

Points to note about the income tax system for companies in Australia include:

• The standard corporate tax rate in Australia is 30%However, businesses with a turnover of less than AUD 50 million and passive income not exceeding 80% of total income will be subject to a preferential tax rate of 25%.
• The residence status of the enterprise determines the scope of tax calculation.. Australian resident businesses are taxed on all their worldwide income, while non-resident businesses are taxed only on income generated in Australia.
• Taxable income includes all sources of income. after deducting eligible deductions, such as operating expenses and asset depreciation.
• The deadline for filing corporate income tax returns is January 15 after the end of the fiscal year (June 1). If approved by the Australian Taxation Office (ATO), businesses may choose a different date. Tax is generally due on the first day of the sixth month and returns are due by the 15th day of the seventh month.
• Australia has many tax incentives, such as the R&D Tax Incentive for small and medium-sized businesses and large corporations, and the Instant Asset Write-Off policy that helps businesses immediately deduct qualifying assets.

2. Corporate tax rates in Australia and tax principles

Australia applies corporate income tax to both resident and non-resident companies. The standard rate is 30%, but businesses with a turnover of less than AUD 50 million and no more than 80% of their income being passive are taxed at 25%.

The principle of taxation is mainly based on the following two main factors: the company's residency status and taxable income in total revenue:

3. Tax incentives for businesses in Australia

Australia offers a range of tax incentives to encourage investment, innovation and promote economic growth. These incentives mainly supports research & development (R&D) activities and asset investment.

3.1. Research and development (R&D) tax incentives

The R&D Tax Incentive is one of the most important tax incentives, which helps encourage businesses to invest in innovation activities by providing a tax credit for qualified R&D expenses.

Eligibility: The business must be established in Australia and undertake systematic, investigative and experimental R&D activities.
Tax reduction:

1. Small businesses (turnover under AUD 20 million) can receive a 43,5% tax rebate (refundable).
2. Large enterprises enjoy tax reductions ranging from 33,5% to 46,5% depending on R&D intensity.

How to register: Businesses need to register their R&D activities with AusIndustry and submit an R&D Tax Incentive application with their annual tax return. 

When the enterprise meets the requirements, GLA will assess the company's operations and prepare appropriate and accurate documents, helping the enterprise qualify for preferential policies of the government.

3.2. Tax incentives for small businesses

Small businesses in Australia enjoy a range of tax incentives to reduce their financial burden and simplify compliance.

• Instant Asset Write-Off:
  • Small businesses can deduct the cost of qualifying assets up to a limit of AUD 20.000.
  • This program applies to properties purchased and occupied between July 1, 7 and June 2023, 30 and has been extended to June 6, 2024.
• Simplified Depreciation: Businesses can group depreciable assets into one group and calculate depreciation together, making asset management easier.
• Preferential tax rate: Small businesses are eligible for a 25% tax rate, instead of the standard 30%.

3.3. Tax-Optimizing Deductions (Important)

Businesses can claim a number of deductions to reduce their taxable income and thus optimize their tax liability. It is important to understand and take advantage of these deductions.

4. How to comply with tax requirements and corporate income tax reporting in Australia

To ensure compliance with corporate income tax regulations, businesses must comply with reporting and recordkeeping requirements set by the Australian Taxation Office (ATO). Compliance with tax regulations not only helps businesses avoid penalties but also optimizes their financial and tax strategies.

4.1. Filing tax returns

• Businesses must file an annual tax return, detailing income, deductions, and taxes payable.
• Returns are lodged online via the ATO system or through a registered tax agent.

4.2. Record keeping

• Accurate record keeping is important to substantiate deductions and ensure tax compliance.
• Businesses must keep invoices, receipts, bank statements and related documents for at least 5 years.

4.3. Tax audit and review

• The ATO regularly conducts tax audits and reviews to ensure businesses comply with the law.
• Businesses must be prepared to provide documentation and explanations of tax decisions if audited.
• Maintaining accurate records and consulting a tax professional will help minimize the risk of non-compliance.
  
  

GLA experts will assist businesses in understanding, complying with and meeting annual tax requirements for companies established in Australia and help businesses plan optimal taxes corresponding to their company's operations.

5. How will GLA support businesses in establishing companies in Australia and providing operational support?

With years of experience in business consulting, GLA has successfully helped many foreign entrepreneurs expanding their companies in Australia. Our key supports are:

• Register your company in Australia with end-to-end guidance.
• Help you choose the most suitable Australian state for your company operations.
• Recommend the right company type based on your business model.
• Handle all necessary paperwork for company registration.
• Provide expert tax advice tailored to your business activities.
• Assist in obtaining the required licenses for your industry
• Support you in opening both physical and online bank account setup in Australia.
• Prepare financial statements and tax returns in accordance with Australian accounting standards.

6. Frequently asked questions about corporate income tax in Australia

Highlights

• The current corporate tax rate in Australia is 30% for Australian companies and 25% for eligible small and medium sized companies.
• Companies in Australia can take advantage of tax incentives from the government with clear plans such as R&D tax relief of up to 43,5%, immediate asset deductions and simplified depreciation.
• Businesses must pay tax on time (15/1 after the end of the financial year), keep proper records and be ready for an ATO audit.
• GLA will ensure that Australian companies comply with the law, ensure that accounting tax records are prepared accurately, optimally, and optimize operational processes.