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LAST UPDATED 24/05/2023
If you’re doing business in Australia, or planning to do so, it’s important to understand the country’s corporate tax laws. Here’s what you need to know:
Companies that are residents of Australia are subject to Australian income tax on their worldwide income. Meanwhile, non-resident companies are typically taxed only on income sourced from Australia, unless they qualify for an exemption under a double taxation agreement (DTA).
All companies in Australia are subject to a federal tax rate of 30% on their taxable income. However, small or medium-sized businesses are subject to a reduced tax rate of 25%, provided that their total annual turnover (along with certain connected entities) is less than AUD 50 million.
To ensure integrity, companies must also meet strict requirements to qualify for the reduced tax rate, including a limit on the percentage of passive income they derive.
There are no state or municipal taxes on income in Australia, which simplifies the tax system for businesses operating in the country.
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