What is the company tax rate in Australia for 2024-25 — base rate vs full rate?

There are two company tax rates in Australia for 2024-25:

Base rate entity tax rate: 25% — This applies to companies that are base rate entities, meaning their aggregated turnover is less than $50 million AND 80% or less of their income is passive income (such as interest, dividends, rents, or royalties from unrelated parties).

Full corporate tax rate: 30% — This applies to all other companies: those with turnover over $50 million, and those where more than 80% of their income is passive regardless of turnover.

The distinction matters for franking credits too. When a base rate entity pays a dividend, it can only frank dividends at 25%, not 30%. If it franks at 30% (because it previously paid tax at 30% in prior years), special rules apply to adjust the franking credit available for that distribution.

For very small companies operating a genuine trading business, the 25% rate combined with the ability to retain profits inside the company can be tax-effective compared to a trust or sole trader structure where all profits flow through to the individual at marginal rates. However, when profits are eventually paid out as dividends, the shareholder pays tax on those dividends (less franking credits), so the overall tax outcome depends on the shareholder's personal rate.