Company Tax Rate 2025
“It’s not what you earn, it’s what you keep that counts.” – David Bach, Financial Author
Imagine this: You’ve just had your biggest year yet. The revenue graphs are surging, your team is growing, and your business is finally humming the way you dreamed it would. But then, your accountant hits you with a bigger-than-expected tax bill. Why?
You assumed your company was paying 25% tax, but the Australian Taxation Office had other ideas about corporate tax rates.
Welcome to the quiet battleground of Australian company tax rates – a place where fortunes are kept or lost depending on one critical classification: whether your business qualifies as a Base Rate Entity.
| Company Type | Tax Rate (2024–25) | Eligibility |
|---|---|---|
| Base Rate Entity (BRE) | 25% | Turnover < $50M + <=80% passive income |
| All other companies | 30% | Does not meet BRE criteria |
What Is a Base Rate Entity, and Why Should You Care?
From the 2021–22 income year onwards, resident companies in Australia pay tax at one of two tax rates:
25% corporate tax rate for Base Rate Entities (BREs)
30% corporate tax for all others
The difference might seem small – but that 5% can translate into hundreds of thousands of dollars either added to your bottom line or absorbed by your company tax obligations.
To qualify as a BRE, your company must meet two conditions:
Aggregated turnover must be less than $50 million for the income year
80% or less of your assessable income must be from passive sources (such as interest, dividends, capital gains, rental income, and royalties)
Let me give you an example: Barry Manilow Pty Ltd makes $5,000,000 profit from Royalties from his music in the current tax year and he makes $1,500,000 from selling his merchandise.(This used to be so much more). The proportion of Passive income to active income is $5Mil / ($5Mil+$1.5 Mil) = 77%. This is under 80% so it is a BRE however next year if people are not “Kinder” to his Merchandise purchases he may fall foul of the higher company tax rate. At a taxable profit of $2Mil this can mean an extra $100,000 in tax.
These rules apply to both small and medium-sized entities and can have a direct impact on your taxable income, corporate income, and fringe benefits tax planning.
👉🏻 Think you’re on the lower company tax rate of 25%? Let’s make sure. The cost of being wrong is too high – get in touch today.
Small Business Tax Rate Australia: Where Many Business Owners Slip Up
You might think: “I’m under the $50 million aggregated turnover threshold, so I’m safe.”
Not so fast.
Let’s say your core business income is $7 million, but this year you also sold off old investment properties and banked a big capital gain – or you parked spare cash in a high-interest account. Suddenly, passive income makes up 82% of your total taxable income.
Boom. You’ve just tipped over the line and instead of paying the lower company tax rate, you’re company is now taxed at the full company tax rate of 30%.
Now you’re on the hook for the full company tax rate of 30%, and it doesn’t just affect your corporate tax bill – it impacts your dividends too.
Strategy – How moving from a BRE to the full company tax rate can have a benefit to shareholders.
It can actually be a clever strategy to transition from a BRE to a Full company tax rate when you are ready to pay more dividends due to retirement or succession planning. The company effectively becomes an investment company like a second superfund only you can access and use the funds with less restrictions.
Dividends now paid when a company is no longer a BRE is franked at 30%. Shareholders will therefore pay less tax as they will get a greater tax credit.
👉🏻 Unclear how to get the most from your company tax rate ?? Let’s clarify it together – talk to Bishop Collins now.
How to Take Back Control of Your Company Tax Position
Here’s your checklist to make sure the lower company tax rate applies to your business:
Track aggregated turnover monthly – including connected and affiliated entities
Categorise income streams early – know what counts as passive for base rate purposes
Plan large transactions (asset sales, capital gains, high-yield investments) with tax impact in mind
Structure your business to stay eligible for small business concessions and tax deductions
Review foreign income, listed investment company status, and worldwide income if applicable
Understand the various business tax obligations and plan accordingly to minimise liabilities
This is no longer about box-ticking for the ATO website – it’s about protecting your capital and making every dollar of corporate income work harder for you.
👉🏻 Don’t wait until your tax return shows the damage – book a review with Bishop Collins to fix it before it’s too late.*
Australian Corporate Tax Rates: Where Bishop Collins Comes In
You’ve worked too hard to let the wrong corporate tax rate undermine your growth.
At Bishop Collins, we work with ambitious business owners and high-net-worth individuals to lock in the right company structure, ensure you’re eligible for the lower tax rate, and design a forward strategy that protects your profits and aligns with your future plans.
We don’t just do compliance. We build financial engines that drive your success – using the Australian taxation system to your advantage. We help you navigate the complexities of the Australian taxation system, ensuring you take full advantage of available tax concessions.
The Window for Tax Planning Is Always Open
The difference between a 25% and 30% corporate income tax rate could be the most overlooked – and most easily fixed – profit lever in your business.
The ATO doesn’t give you a pass for good intentions, and different tax rates apply to various income years. You either qualify as a base rate entity or you don’t. And your tax return reflects the consequences.
Time to Act
There’s an opportunity within the current financial year to restructure your income mix, entity setup, and capital gains tax position.
Now’s the time to make sure your taxable income, payments, and expenses are working for your business, not against it.
Book a strategy session with Bishop Collins to ensure your tax position is optimised – before it’s too late.
Because in business, the difference between smart and strategic is often the right advice – at the right time.