The Australian company tax rate is 30%. A company pays 25% instead if it is a base rate entity: aggregated turnover under $50 million and no more than 80% of its assessable income from passive sources. A foreign-owned company must count the turnover of its overseas parent and affiliates, so many subsidiaries of larger groups pay 30%. Australian subsidiaries are taxed on worldwide income. Branches of foreign companies are taxed on Australian-source income at the same rates.
The Australian company tax rate is 30%. Smaller companies that qualify as base rate entities pay 25%. These are the 2026-27 corporate tax rates, and they have not changed since 2021-22.
This guide starts with the corporate tax rate for foreign investors. It then covers personal, non-resident, withholding, CGT and Medicare rates for the 2026-27 financial year (1 July 2026 to 30 June 2027).
Company Tax Rate
| Company type | Tax rate |
|---|---|
| Base rate entity | 25% |
| All other companies | 30% |
A company is a base rate entity for an income year if it meets both tests for that year:
- Its aggregated turnover is less than $50 million.
- No more than 80% of its assessable income is base rate entity passive income.
Only the current year counts. Last year's turnover does not matter.
The passive income test
Base rate entity passive income is, in the ATO's list:
- dividends and other corporate distributions, plus their franking credits
- royalties and rent
- interest (with some exceptions)
- gains on qualifying securities
- a net capital gain
- trust or partnership distributions, to the extent they come from those types of income.
A trading company usually passes easily. A holding or investment company whose income is mostly dividends, interest or rent fails the test and pays 30%, even with low turnover. A one-off capital gain, such as selling the office building, can also push a small company over 80% for that year.
Aggregated turnover includes the overseas group
This is the point foreign investors most often miss. Aggregated turnover is not just the Australian company's own sales. It also includes the annual turnover of every business entity that is connected with it or is its affiliate, even if they are foreign residents.
The ATO's own example: an Australian subsidiary with $20 million of turnover is wholly owned by a US company with $150 million of sales, all made outside Australia. Its aggregated turnover is $170 million. It is not a base rate entity, so it pays 30%.
So the 25% rate is mainly for start-ups and smaller foreign groups. If your worldwide group turns over $50 million or more, plan on 30%. Dealings between group members are excluded from the calculation.
How Foreign-Owned Companies Are Taxed
A foreign business can operate in Australia through a subsidiary (an Australian Pty Ltd) or a registered branch of the overseas company. Both pay the same company tax rates. What differs is the income that is taxed and how profits get back to the parent.
| Australian subsidiary (Pty Ltd) | Branch of a foreign company | |
|---|---|---|
| Tax residency | Australian resident (incorporated in Australia) | Foreign resident |
| Income taxed in Australia | Worldwide income | Australian-source income, such as profits of its Australian permanent establishment |
| Company tax rate | 30%, or 25% as a base rate entity | 30%, or 25% as a base rate entity |
| Sending profits home | Dividends. Fully franked dividends have no withholding tax. Unfranked dividends have 30% withholding, or the lower treaty rate | Branch remittances are not dividends, so no dividend withholding tax applies |
| Interest and royalties paid to the parent | 10% interest withholding, 30% royalty withholding, or lower treaty rates | A branch and its head office are one legal entity, so it cannot pay interest or royalties to itself. Payments to other group companies follow the normal withholding rules |
Australia has no separate branch profits tax. See our guides to branch tax in Australia and branch vs subsidiary for the detail.
Franking credits and foreign shareholders
When an Australian company pays company tax, it can attach franking credits to its dividends. A foreign shareholder cannot claim a refund of those credits. The benefit is that a fully franked dividend paid to a foreign resident has no Australian withholding tax. Only the unfranked part is taxed, at 30% or the treaty rate.
The maximum franking rate is based on last year's figures. If the company was a base rate entity on the previous year's turnover and income (or did not exist last year), it franks at 25%. Otherwise it franks at 30%. Read our profit repatriation guide for the options.
Other points for foreign-owned companies
- Global minimum tax: large multinational groups in scope of the global minimum tax may pay top-up tax if their effective rate in Australia is below 15%.
- Loss carry-back: from 2026-27, companies that are not significant global entities can again carry a tax loss back against tax paid in the previous two years. The refund is capped at the franking account balance.
- R&D: early-stage companies can reduce their effective rate through the R&D tax incentive. The same aggregated turnover rules apply.
- Lodgement: rates tell you what you owe. The tax compliance calendar for foreign companies tells you when and how to lodge.
Individual Resident Tax Rates
Australian tax residents pay tax on their worldwide income at progressive rates. From 1 July 2026 the 16% rate falls to 15% (Treasury Laws Amendment (More Cost of Living Relief) Act 2025), and it falls again to 14% from 1 July 2027.
| Taxable Income | Tax on This Income | Effective Marginal Rate (incl. Medicare) |
|---|---|---|
| $0 – $18,200 | Nil | 0% |
| $18,201 – $45,000 | 15c for each $1 over $18,200 | 17% |
| $45,001 – $135,000 | $4,020 plus 30c for each $1 over $45,000 | 32% |
| $135,001 – $190,000 | $31,020 plus 37c for each $1 over $135,000 | 39% |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 | 47% |
The 2% Medicare levy is added on top of these rates for Australian residents (see Medicare Levy section below).
Low Income Tax Offset (LITO)
The Low Income Tax Offset reduces tax for individuals earning up to $66,667:
- Income up to $37,500: $700 offset (maximum)
- $37,501 to $45,000: reduces by 5c per $1 over $37,500
- $45,001 to $66,667: reduces by 1.5c per $1 over $45,000
With LITO, the effective tax-free threshold is $22,867 for 2026-27.
Tax Payable Examples (Resident, 2026-27, Including Medicare Levy and LITO)
| Taxable Income | Tax Payable | Effective Rate |
|---|---|---|
| $50,000 | $6,270 | 12.5% |
| $80,000 | $16,120 | 20.2% |
| $100,000 | $22,520 | 22.5% |
| $150,000 | $39,570 | 26.4% |
| $200,000 | $59,870 | 29.9% |
Non-Resident (Foreign Individual) Tax Rates
Foreign residents for tax purposes pay higher rates and have no tax-free threshold – tax applies from the first dollar of Australian-sourced income. Non-residents do not pay the Medicare levy.
| Taxable Income | Tax on This Income |
|---|---|
| $0 – $135,000 | 30c for each $1 |
| $135,001 – $190,000 | $40,500 plus 37c for each $1 over $135,000 |
| $190,001 and over | $60,850 plus 45c for each $1 over $190,000 |
Resident vs Non-Resident Comparison
A foreign individual earning $100,000 from Australian sources pays approximately $30,000 in tax (30% flat). An Australian resident earning the same amount pays approximately $22,520 in 2026-27 (including Medicare levy). The difference narrows at higher income levels due to the progressive rate structure.
Non-resident status is determined by the ATO based on several factors including domicile, duration of stay, and intention to reside in Australia. Directors and employees posted to Australia for extended periods may be treated as residents for tax purposes.
Working Holiday Maker Tax Rates
Visa subclass 417 (Working Holiday) and 462 (Work and Holiday) holders pay a special flat rate:
| Taxable Income | Tax on This Income |
|---|---|
| $0 – $45,000 | 15c for each $1 |
| $45,001 – $135,000 | $6,750 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $33,750 plus 37c for each $1 over $135,000 |
| $190,001 and over | $54,100 plus 45c for each $1 over $190,000 |
Employers must be registered as WHM employers with the ATO to withhold at these rates. Unregistered employers must withhold at the higher foreign resident rates (30% from the first dollar).
Withholding Tax on Payments to Non-Residents
When an Australian entity makes certain payments to overseas recipients, it must withhold tax at the following rates:
Default Rates (No Treaty)
| Payment Type | Withholding Rate |
|---|---|
| Unfranked dividends | 30% |
| Interest | 10% |
| Royalties | 30% |
| Fully franked dividends | Nil |
| Management/service fees | No specific WHT |
Australia does not impose a general withholding tax on pure management or service fees paid to non-residents. However, payments that constitute royalties (know-how, technical knowledge, IP licensing) are subject to royalty withholding tax.
Reduced Rates Under Double Tax Agreements
Australia has comprehensive tax treaties with 46 jurisdictions. Reduced withholding rates apply for treaty countries. See our double tax agreements guide for more countries.
| Country | Dividends | Participation Dividends | Interest | Royalties |
|---|---|---|---|---|
| United States | 15% | 5% (10%+ holding), 0% (80%+ holding) | 10% | 5% |
| United Kingdom | 15% | 5% (10%+ holding), 0% (80%+ holding) | 10% | 5% |
| Singapore | 15% | 15% (no lower rate) | 10% | 10% |
| China (PRC) | 15% | 15% | 10% | 10% |
| Japan | 10% | 5% (10%+ holding), 0% (80%+ holding) | 10% | 5% |
| India | 15% | 15% | 15% | 10-15% |
| Hong Kong | 30% | 30% | 10% | 30% |
The 0% rates have extra conditions, such as a 12-month holding period. Fully franked dividends have no withholding tax in any case.
Important: Australia and Hong Kong do not have a Double Tax Agreement despite the A-HKFTA free trade agreement. Hong Kong companies repatriating profits from Australia face the full 30% unfranked dividend withholding rate.
Capital Gains Tax
Capital gains are included in assessable income and taxed at the applicable income tax rate. A CGT discount may apply:
| Taxpayer Type | CGT Discount | Requirement |
|---|---|---|
| Australian resident individual | 50% | Asset held 12+ months |
| Complying super fund | 33.33% | Asset held 12+ months |
| Company | Nil | N/A |
| Non-resident individual | Nil | Assets acquired after 8 May 2012 |
Non-residents are only taxed on taxable Australian property (TAP):
- Direct interests in Australian real property
- Indirect interests (10%+ in an entity with majority Australian real property assets)
- Assets used in an Australian permanent establishment
Medicare Levy
The Medicare levy funds Australia's public health system. Only Australian residents pay it.
Rate
- 2% of taxable income
- Foreign residents and working holiday makers are exempt
Low-Income Thresholds
Low-income earners pay a reduced levy or none. The latest legislated thresholds, which apply from 2025-26 until next amended, are below. The levy phases in between the threshold and 1.25 times the threshold.
| Category | No Levy Below | Full 2% From About |
|---|---|---|
| Singles | $28,011 | $35,014 |
| Families | $47,238 | $59,048 |
| Seniors and pensioners (single) | $44,268 | $55,335 |
Medicare Levy Surcharge
An additional surcharge applies if you earn above the income thresholds and don't hold private hospital insurance. The thresholds below apply for 2026-27 (the family threshold rises by $1,500 for each dependent child after the first):
| Income Tier | Singles | Families | MLS Rate |
|---|---|---|---|
| Tier 1 | $105,001 to $123,000 | $210,001 to $246,000 | 1.0% |
| Tier 2 | $123,001 to $164,000 | $246,001 to $328,000 | 1.25% |
| Tier 3 | $164,001+ | $328,001+ | 1.5% |
Superannuation Guarantee
Employers must contribute 12% to an employee's superannuation fund (unchanged for 2026-27). From 1 July 2026 it is calculated on "qualifying earnings" and, under Payday Super, must reach the employee's fund within 7 business days of each payday. The maximum super contribution base is $270,830 a year for 2026-27. This applies to all employees, including those on working holiday visas.
What Changed in 2026-27
| Item | 2025-26 | 2026-27 |
|---|---|---|
| Lowest personal tax rate | 16% | 15% |
| Company tax rate | 25%/30% | Unchanged |
| Superannuation guarantee | 12% of ordinary time earnings, paid quarterly | 12% of qualifying earnings, paid each payday |
| Instant asset write-off (small business) | $20,000 (temporary) | $20,000, now permanent |
| Company loss carry-back | Not available | Available again (non-SGE companies) |
| Foreign resident CGT | 15% withholding | 15% withholding; wider real property rules from 1 October 2026 |
Coming in 2027-28: the lowest personal rate falls again, to 14% from 1 July 2027.
Frequently Asked Questions
What is the company tax rate in Australia?
The Australian company tax rate is 30%. Companies that are base rate entities pay 25%. The rates are the same for 2026-27 as for every year since 2021-22.
Who qualifies for the 25% company tax rate?
A base rate entity: a company with aggregated turnover under $50 million in the year, and no more than 80% of its assessable income from base rate entity passive income, such as dividends, interest, rent, royalties and net capital gains.
Do foreign-owned companies pay the 25% rate?
Only if they pass both tests. Aggregated turnover includes the turnover of the overseas parent and other connected entities and affiliates. A subsidiary of a group with $50 million or more of worldwide turnover pays 30%.
Do foreign companies pay tax in Australia?
Yes. A foreign company with an Australian branch pays company tax on its Australian-source income, at 30% or 25%. An Australian subsidiary is an Australian resident and pays company tax on its worldwide income.
Is there withholding tax on dividends paid to a foreign parent?
Fully franked dividends have no withholding tax. The unfranked part is taxed at 30%, or a lower rate if the parent's country has a tax treaty with Australia. Most treaties set 15%, and some set 5% or 0% for large corporate holdings.
How AusBusinessRegister.com.au Can Help
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Request a free quote to discuss your Australian tax and compliance requirements.
All rates verified against the ATO and the legislation as at October 2026. Tax rates apply for the 2026-27 financial year (1 July 2026 to 30 June 2027). This guide is for general information only and does not constitute tax advice. Consult a registered tax agent for advice specific to your circumstances.
This content is general information only and is not legal, financial or tax advice. Laws and regulations change often. For advice on your circumstances, speak to a qualified adviser.