Tax compliance
services in Australia.

The standard corporate income tax rate in Australia is 30%, applying to companies that do not qualify as base rate entities. Base rate entities with aggregated annual turnover below AUD 50 million and whose passive income does not exceed 80% of total assessable income pay a reduced rate of 25%. Most small and medium-sized operating companies qualify for the 25% rate.

Australia operates a dividend imputation system under which corporate tax paid attaches to dividends as franking credits. Shareholders receiving fully franked dividends can offset those credits against their own tax liability, effectively eliminating double taxation of distributed profits for Australian resident shareholders. For foreign shareholders, the benefit of franking credits depends on the applicable tax treaty. Australia has no separate capital gains tax — gains are included in assessable income and taxed at the applicable corporate rate, with a 50% discount available to individuals and trusts but not to companies. For a full overview, see the guide to corporate income tax in Australia.

Key annual and recurring deadlines for Australian companies are:

• Company income tax return: 31 October for self-preparers, with tax agent lodgement program deadlines typically ranging from January to May depending on entity size and prior compliance history
• Business Activity Statement (BAS): due 28 days after the end of each quarter for quarterly lodgers
• Fringe Benefits Tax return: lodged and paid by 21 May, with a tax agent extension to 25 June
• PAYG withholding: remitted monthly or quarterly depending on the amount withheld, with annual PAYG payment summaries due by 14 August

Missing these deadlines triggers Failure to Lodge penalties that accrue for each 28-day period a return remains outstanding, with the penalty rate scaling by entity size. Companies using a registered tax agent should confirm their specific deadlines under the lodgement program at the start of each financial year.

The ATO applies a Failure to Lodge penalty scaled by entity size:

• Small entities: one penalty unit (currently AUD 330, subject to periodic indexation) per 28-day period, capped at five units
• Medium entities with annual turnover between AUD 1 million and AUD 20 million: two times the base penalty amount
• Large entities: five times the base penalty amount

For underreported income, shortfall penalties range from 25% of the underpaid amount for failure to take reasonable care up to 75% for intentional disregard of tax law. Voluntary disclosure made before the ATO notifies a taxpayer of an audit reduces shortfall penalties by up to 80%. The ATO also charges the Shortfall Interest Charge on underpaid tax from the original due date, which applies independently of the shortfall penalty.

The R&D Tax Incentive provides a tax offset for eligible R&D expenditure incurred in Australia, with a minimum spend of AUD 20,000 per income year. Companies with aggregated annual turnover below AUD 20 million receive a refundable offset at the corporate tax rate plus an 18.5% premium, meaning a loss-making company can receive a cash refund. Larger companies receive a non-refundable offset at the corporate tax rate plus 8.5% on R&D intensity up to 2% of total expenditure and 16.5% on spend above that threshold, rewarding companies that invest more heavily in R&D relative to their overall cost base.

Activities must constitute genuine experimental work aimed at generating new knowledge or capabilities and must be registered with AusIndustry within ten months of the end of the relevant income year. Claims are subject to joint administration by AusIndustry and the ATO, and documentation of experimental activities and expenditure must be maintained contemporaneously. For a full overview of eligibility and the registration process, see the guide to the R&D Tax Incentive in Australia.

A foreign company with a permanent establishment in Australia, including a fixed place of business, a dependent agent or an ongoing construction or installation site, must meet the following obligations:

• Corporate income tax: lodged annually at 30%, or 25% for base rate entities with aggregated turnover below AUD 50 million
• GST registration: required once Australian taxable supplies exceed AUD 75,000 per year
• Withholding tax: applies to dividends, interest and royalties paid to non-residents at rates typically between 10% and 30%, subject to any applicable tax treaty
• Transfer pricing: cross-border related-party transactions must be priced and documented on arm’s length terms
• Thin capitalisation: debt deductions are limited under rules revised from the 2023-24 income year, now applying a fixed ratio test based on earnings rather than the previous asset-based safe harbour

For foreign investors with complex structures, early engagement with the ATO’s advance pricing arrangement programme can reduce transfer pricing risk.