Australia Corporate Tax - Guide for International Expansion

Are you considering expanding your business to Australia? Understanding the corporate tax landscape is crucial for making informed decisions about your Australian operations. Australia offers a stable regulatory environment with clear tax obligations, making it an attractive destination for international businesses.

Whether you're exploring market entry or already operating Down Under, getting to grips with corporate tax requirements will help ensure compliance and effective financial planning. With Wise Business, managing your Australian tax obligations and cross-border payments becomes straightforward, allowing you to focus on growing your business in this dynamic market.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Australia corporate tax rate in 2025

The standard corporate tax rate in Australia is 30% for companies with an annual turnover of $50 million or more. However, small and medium-sized businesses benefit from a reduced rate of 25% if their annual turnover is less than $50 million.^{1 9} This lower rate applies to both Australian resident companies and foreign companies carrying on business in Australia through a permanent establishment.⁸

Australia also offers additional tax concessions for certain activities. The Research and Development (R&D) Tax Incentive provides tax offsets for eligible R&D expenditure, with rates of 43.5% for companies with turnover under $20 million and 38.5% for larger companies.^{2 3} Companies may also benefit from various other incentives, including the instant asset write-off scheme and accelerated depreciation for certain assets.^{4 5}

Australian resident companies are taxed on their worldwide income, whilst non-resident companies are generally only taxed on Australian-source income.⁶ A company is considered an Australian tax resident if it's incorporated in Australia or carries on business in Australia and has its central management and control in Australia.⁷

Read more about Corporate Tax Planning best practices

How to pay corporate tax in Australia

Companies in Australia must use the Australian Taxation Office (ATO) online services to lodge their tax returns and make payments.¹⁰ The ATO's Business Portal provides a secure platform for managing all tax obligations, including company tax, PAYG instalments, and other business taxes.¹¹

Corporate tax in Australia is paid in Australian dollars (AUD). Companies with foreign functional currencies must convert their accounts to AUD using appropriate exchange rates as specified by the ATO.¹² The ATO accepts various payment methods including direct debit, credit card, BPAY, and electronic funds transfer.¹³

Most companies must lodge their annual company tax return by 31 October for a standard 30 June year-end.¹⁴ However, companies using a registered tax agent may receive an extension until 15 May of the following year.¹⁵

Companies are also required to pay quarterly PAYG instalments throughout the year based on their expected annual tax liability. These instalments help spread the tax burden and avoid large lump-sum payments at year-end.¹⁶

If a company fails to pay tax by the due date, the ATO charges a general interest charge (GIC) calculated daily on the outstanding amount.¹⁷ The GIC rate is set quarterly and was 10.78% per annum as of July-September 2025.¹⁸

Let's consider a practical example: if your company has an annual turnover of AUD 1.5 million and operates with a 10% profit margin, your taxable profit would be AUD 150,000. At the small business tax rate of 25%, your annual tax liability would be:

AUD 150,000 × 25% = AUD 37,500

If this tax payment is 30 days late, with the GIC rate at 10.78% per annum (approximately 0.030% daily), the interest charge would be:

AUD 37,500 × 30 days × 0.030% = AUD 337.50

Total amount owed: AUD 37,500 + AUD 337.50 = AUD 37,837.50

The ATO may also impose administrative penalties for late lodgement. These penalties are calculated based on a penalty unit, which is currently valued at $330.¹⁹ For small entities, the penalty is one penalty unit ($330) for each 28-day period the return is overdue, up to a maximum of $1,650. The penalty is multiplied for larger entities, with a maximum of $3,300 for medium entities and $8,250 for large entities.²⁰

When expanding your business to Australia, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to expand internationally with local EUR account details. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Australia

The key steps to keep your company compliant with the corporate tax requirements in Australia are:

• Register for taxes early: Once your business is incorporated, register for an Australian Business Number (ABN) and a Tax File Number (TFN). Companies must also set up a corporate tax account with the Australian Taxation Office (ATO) to report and pay taxes.
• Understand payment deadlines: Corporate tax in Australia is generally paid annually, with returns lodged by the 15th day of the seventh month after the end of the company’s income year. Late payments can attract penalties and interest charges.
• Meet reporting obligations: All companies must file an annual corporate tax return with the ATO, even if no taxable income was earned. Businesses registered for GST must also file quarterly or monthly activity statements.
• Avoid penalties: Failure to lodge a return on time can lead to fines, which vary depending on the size of the company. Maintaining accurate records and timely submissions is essential.
• Get professional help: Many firms seek assistance from tax professionals. Knowing how much accountants charge for corporate tax in Australia can help budget for compliance. Businesses may also look at corporate tax associate jobs or in-house advisors to manage filings effectively.

The ATO increasingly requires electronic lodgment of corporate tax returns and activity statements. Most companies must file online through approved software or via registered tax agents, ensuring faster processing and reduced errors.

International Expansion to Australia

Australia is another strong base for companies planning expansion. The country’s GDP is $1.77 trillion, making it the 13th-largest economy in the world.²¹ GDP per capita stands at $64,550.²² This is higher than the advanced economies’ average of $60,320.²³ Its population of 27.5 million creates a wealthy and diverse consumer base.²² The International Monetary Fund expects Australia’s growth to outperform other advanced economies through 2029.²¹

Australia’s location in the Asia-Pacific is close to major markets such as China, Japan, and ASEAN nations. Over 70% of exports go to Asia, showing the country’s regional strength. Fifteen international airports and 10 major ports connect Australia efficiently to global trade routes.²¹

Trade access is further enhanced by 18 free trade agreements, with five more pending. These include FTAs with China, Japan, Korea, India, the UK, and the US, giving businesses access to some of the world’s largest markets.²¹

Government initiatives also attract investment. Austrade promotes programs like “Future Made in Australia,” which allocates $22.7 billion to clean energy and advanced industries.²⁴

The Australian corporate tax rate is competitive compared to other OECD countries. Tax revenue equals 29% of GDP, below the OECD average of 34%.²⁵ Businesses exploring the Australian market or filing a corporate tax return can benefit from a transparent system. Options to pay corporate tax online make compliance simple. For investors new to the market, understanding the corporate tax meaning in Australia and the current corporate tax rate is an important step before starting operations.

Steps to establish a business in Australia include:²⁶

1. Research the industry, competitors, and workforce.
2. Choose a location and register your business name.
3. Select a business structure.
4. Apply for an Australian Business Number (ABN). Companies also require an Australian Company Number (ACN).
5. Register for taxes and obtain a Tax File Number (TFN).
6. Secure licenses or permits if required.

Australia combines economic muscle, efficient trade ties, and practical investor support. For example, the UK-Australia free trade agreement eases trade barriers, simplifies red tape, and offers British businesses access to major procurement contracts. This illustrates why many UK firms rank Australia among the easiest countries to expand into.

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Incorporation of Business in Australia

To incorporate a company in Australia, businesses must register with the Australian Securities and Investments Commission (ASIC). The process is simple and can be completed online. When registration is successful, ASIC issues a Certificate of Registration confirming that the company has been legally established.

You’ll need to prepare the following details:²⁷

• Company type: Decide which type of entity best suits your business goals.
• Internal governance: Define procedures for board and shareholder meetings, share transfers, and the appointment or removal of directors.
• Director and secretary details: Provide information on those responsible for managing the company on behalf of shareholders. At least one director must be an Australian resident.
• Business name: Choose and reserve a unique name with ASIC.
• Shareholders' agreement: Outline the rights, roles, and responsibilities of shareholders.
• Registration: Complete Form 201, submit it to ASIC with the prescribed fee, and secure your Certificate of Registration.

When starting in Australia, know that it recognises several business structures. Each with different compliance and taxation requirements:²¹

• Proprietary Limited Company (Pty Ltd): The most common structure, similar to a Limited Liability Company (LLC). It creates a separate legal entity, and liability is limited to the amount invested. A Pty Ltd requires at least one shareholder and one resident director, and can have up to 50 non-employee shareholders.
• Public Limited Company: This entity is suitable for larger businesses, especially those considering a stock exchange listing. Public companies must have at least three directors (two resident in Australia) and one resident secretary.
• Partnerships: Two or more people or entities share business income or losses. Partnerships are inexpensive to set up and have lighter reporting requirements, though partners remain personally liable.

Note: Working with experienced corporate tax advisors can help optimise available corporate tax credits and reduce liability.

Also, Australia’s Research & Development (R&D) Tax Incentive continues to support innovation with generous offsets. However, as of mid-2025, the program has introduced stricter guidelines. R&D activities connected to gambling and tobacco are now excluded from eligibility. This makes it more important than ever for companies to maintain detailed documentation of R&D activities to support their claims.²

International corporate tax best practices

Managing international corporate tax obligations requires a strategic approach to ensure compliance whilst optimising your tax position. Here are key practices that successful multinational businesses follow.

Maintain robust compliance across all jurisdictions where you operate. This means understanding local tax laws, filing requirements, and payment deadlines in each country. Regular reviews of tax positions help identify potential issues before they become costly problems.

Take advantage of Australia's extensive network of double taxation agreements (DTAs). Australia has comprehensive tax treaties with over 45 countries, which can significantly reduce withholding taxes and eliminate double taxation on the same income.²⁸ Understanding these treaties is crucial for optimising your global tax position.²⁹

Implement strong transfer pricing documentation and policies. The Australian Taxation Office closely scrutinises related-party transactions, and having contemporaneous documentation that supports arm's length pricing is essential for avoiding disputes and penalties.³⁰

Consider the impact of Australia's thin capitalisation rules if your business has significant debt funding. These rules limit the amount of debt deductions available to prevent profit shifting through excessive interest payments.³¹

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Australia efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Australia

Who is liable for corporate tax in Australia?

All companies incorporated in Australia are liable for corporate tax on their worldwide income. Foreign companies are liable for Australian corporate tax on income derived from Australian sources, including income from carrying on business in Australia through a permanent establishment. This includes income from Australian property, business operations, and certain passive income sources.

Are there any tax incentives for businesses in Australia?

Yes, Australia offers several tax incentives. The Research and Development Tax Incentive provides tax offsets for eligible R&D activities. Small businesses can access the instant asset write-off scheme, allowing immediate deduction of eligible assets. There are also specific incentives for certain industries, including film production offsets, exploration incentives for mining companies, and various regional development incentives.

What is the tax treatment of dividends in Australia?

Australia operates a dividend imputation system, where companies can attach franking credits to dividends paid to shareholders. These credits represent the corporate tax already paid by the company. Australian resident shareholders can use these credits to offset their personal tax liability, whilst non-resident shareholders may be entitled to reduced withholding tax rates under applicable tax treaties.³²

What is the process for registering for corporate tax in Australia?

Companies must obtain an Australian Business Number (ABN) and register for corporate tax with the ATO. This can be done online through the Australian Business Register. New companies typically have 21 days from the date of incorporation to register for tax. Foreign companies carrying on business in Australia must also register within 21 days of commencing business activities.

What are the common pitfalls to avoid regarding corporate tax in Australia?

Common mistakes include failing to register for tax obligations on time, inadequate record-keeping, not understanding residency rules, and poor transfer pricing documentation. Many businesses also underestimate their PAYG instalment obligations or fail to consider the impact of thin capitalisation rules. It's crucial to seek professional advice and maintain comprehensive records of all business transactions and tax positions.

Sources used in this article:

1. Company Tax Rate Changes in Australia
2. Overview of the R&D Tax Incentive
3. About the R&D Program
4. Instant Asset Write-off
5. Backing Business Investment - Accelerated Depreciation
6. Treasury's Country Tax Residency Disclosures
7. PwC Tax Summaries: Australian Corporate Income Taxes
8. Working Out Your Residency for Tax Purposes
9. ATO Company Tax Rates 2024-25
10. ATO Online Services for Businesses and Organisations
11. Business Portal Login
12. ATO Foreign Exchange Rates
13. Other Payment Options
14. Due Dates for Tax Returns by Client Type
15. Australian Tax Deadlines
16. PAYG Instalments for Business and Investment Income
17. General Interest Charge (GIC)
18. General Interest Charge (GIC) Rates
19. Penalty Units for Tax Offenses
20. Failure to Lodge on Time Penalty
21. Starting a Business in Australia
22. IMF Australia Country Profile
23. IMF Advanced Economies Country Profile
24. 2024-25 Budget Factsheet
25. Why Australia? Economic and Business Fundamentals
26. Guide to Starting a Business in Australia
27. ASIC Guide to Registering a Company
28. What are Tax Treaties?
29. Treasury's Tax Treaties Information
30. ATO Transfer Pricing Rules
31. Understanding Thin Capitalisation Rules
32. Dividend Imputation and Franking Credits

Sources last checked 02/09/2025