Company tax returns for private companies

Who it is for

• Private (Pty Ltd) companies running a trading business
• Directors and shareholders who draw wages, director fees or dividends from their company
• Companies that have lent money to, or paid expenses for, shareholders or their family
• Corporate trustees and companies that receive trust distributions
• Newly registered companies lodging their first return
• Companies with overdue returns from earlier years

A company is its own taxpayer

A company is a separate legal entity, so the money it earns belongs to the company and not to its owners. Business.gov.au lists an annual company tax return to the ATO as one of the core obligations of running a company, alongside the ASIC annual review, a yearly solvency declaration by the directors and a director ID for every director.

The ATO's 2026 instructions say that a company that derived assessable income in 2025–26 must lodge a 2025–26 company tax return. A company that is carrying forward losses of more than $1,000 into 2026–27 must also lodge for 2025–26, even if it earned no assessable income that year.

At Ross Accounting, company work is handled by our accounting team, including Chau Tran CPA, who looks after financial statements, business activity statements, company tax returns and trust and self-managed super fund accounts. Ross Accounting Pty Ltd is a registered tax agent with the Tax Practitioners Board, registration number 21430015, which you can check on the TPB public register.

Company tax rates: 25% or 30%

The ATO sets two company tax rates. A company that is a base rate entity pays 25%, and every other company pays the full rate of 30%. The ATO's rate table shows these rates applying from 2021–22 and future years, and its 2025–26 table confirms 25% and 30% for that year. The ATO has not yet published a separate rate table for 2026–27, so the current position comes from that "future years" wording on its company tax rate changes page.

Under the ATO's rules, a company is a base rate entity for an income year when both of these apply for that same year:

• its aggregated turnover is under the $50 million threshold, and
• no more than 80% of its assessable income is base rate entity passive income, such as dividends and franking credits, rent, royalties, most interest, a net capital gain, and trust or partnership amounts that trace back to that kind of income.

The test looks only at actual figures for the year being assessed, not last year's turnover or an estimate. That matters for companies that mainly hold investments or that sell a large asset: a one-off capital gain can push passive income above 80% and move the company to the 30% rate for that year. Our company tax rates guide explains the test with examples.

When a company tax return is due

Company returns are lodged after the end of the income year, which for most companies is 30 June. Returns being prepared now are for the 2025–26 year. When a registered tax agent lodges, the ATO's lodgment program sets the due date, and the date depends on the company's size and lodgment history.

The 5 June date is not a due date as such: the ATO says it waives penalties if eligible returns are lodged by then. Companies that prepare and lodge their own returns without an agent are generally due by 28 February, which is 28 February 2027 for a 2025–26 return, or by 31 October (31 October 2026) if the previous year's return was not lodged on time or earlier returns were overdue. The ATO's 2026 instructions describe the statutory due date for a company's tax as the first day of the sixth month of the following income year, which is 1 December for a 30 June balancer, although the agent program above sets later payment dates for many companies. General interest charge applies to amounts still unpaid after the due date.

A return lodged without the schedules it needs may not count as lodged in the approved form, and late lodgment can attract a penalty. Our tax return deadlines guide and the tax calendar list the other key dates.

Under the agent lodgment program, a company with any earlier-year return still outstanding at 30 June 2026 has its 2025–26 return due by 31 October 2026, well ahead of the usual 15 May 2027 date.

Financial statements come first

A company tax return is built from the company's accounts. We prepare the profit and loss statement and balance sheet, reconcile the bank and loan accounts, and then make the tax adjustments that turn accounting profit into taxable income, such as non-deductible expenses, depreciation, and capital gains.

A company carrying on a business is legally required to keep records that document and explain its tax-related transactions. The ATO cross-checks returns against third-party data, including dividend and interest income, and prefers investment income to be itemised on the return rather than included in business income; where that does not happen, the company may receive an income discrepancy letter. See our financial statements service and bookkeeping service for help keeping the books in shape through the year.

Instant asset write-off

Companies that are small business entities (aggregated turnover under $10 million) and use simplified depreciation can immediately deduct the business-use portion of eligible assets costing less than $20,000 each. The ATO confirms the $20,000 limit applied for 2025–26 assets first used or installed by 30 June 2026, and that the measure making $20,000 permanent from 1 July 2026 is now law. Our instant asset write-off guide has the detail.

ATO interest is no longer deductible

Under a 2025 change to the tax law, most companies can no longer deduct general interest charge or shortfall interest charge incurred on or after 1 July 2025, starting with the 2025–26 return, according to the ATO's list of what is new for companies. Companies with a substituted accounting period are affected from a different date.

Taking money out of a company: Division 7A

The ATO is clear that a company's money is not the owner's money, even when the owner is the only director and shareholder. Profits can come out as wages, director fees or dividends, each of which is taxed to the person who receives it. Money taken out in other ways, such as loans, paying private expenses or private use of company assets, can fall under Division 7A.

Division 7A can treat a loan from a private company to a shareholder, or to an associate such as a relative, spouse or related trust, as an unfranked dividend. That happens if the loan is not repaid before the company's lodgment day (the earlier of its return due date or the date it actually lodges), unless the loan is put on a complying loan agreement by then. A complying loan needs:

• a written agreement in place before the company's lodgment day
• interest each year at no less than the benchmark rate, which is 8.77% for the income year ending 30 June 2027 (2026–27) and was 8.37% for the year ending 30 June 2026 (2025–26)
• a maximum term of 7 years, or 25 years if the whole loan is secured by a registered mortgage over real property whose market value (less any prior-ranking debts) is at least 110% of the loan when it is made.

In each income year after the loan is made, a minimum yearly repayment of principal and interest is required, worked out using that year's benchmark rate. The ATO notes that a dividend journal entry made after year end, without supporting evidence, will not offset that repayment: the offset must be agreed and made by the end of the income year, usually 30 June. The ATO has also flagged that it is reviewing its Division 7A loan guidance after the High Court's Bendel decision. Shareholder loan accounts are reviewed as part of preparing a company return. Our Division 7A guide covers the rules in more depth.

Franking credits on dividends

When an Australian resident company pays a dividend out of profits it has already paid tax on, it can attach franking credits. Shareholders include the dividend and the credit in their income and then receive a tax offset for the tax the company already paid, which is how the imputation system avoids taxing the same profit twice.

The maximum franking credit depends on the company's corporate tax rate for imputation purposes. Unlike the company tax rate itself, this is worked out by assuming the current year's turnover and passive income will be the same as the previous year's. A company whose previous-year turnover was under $50 million with no more than 80% passive income, or that did not exist last year, generally has a 25% rate for imputation purposes; otherwise the rate is 30%. Using the ATO's formula, a $75,000 dividend franked at 25% can carry franking credits of up to $25,000.

The company must give every shareholder who receives a dividend a distribution statement showing the amount, the franking credit and the franked and unfranked parts. A company whose franking account is in deficit at the end of the income year must lodge a franking account tax return and pay franking deficit tax, generally by the last day of the following month, which is 31 July for a 30 June balancer. Dividends that Division 7A deems to have been paid generally cannot be franked.

How it works

1. 1
   Get in touch

   Call 1300 711 149, or contact us. If earlier years are outstanding, tell us early so we can work out the company's due date.

2. 2
   Send the records

   Provide the bank statements, accounting file and the documents listed below, or upload them through the MyAccountants app.

3. 3
   Accounts and tax position

   We prepare the financial statements, review shareholder loan accounts and dividends, and work out the company's tax rate and taxable income.

4. 4
   Review and lodge

   We take the directors through the result, including any tax payable and the payment date, and lodge the return once they approve it.

What to bring

• Bank, credit card and loan statements for the full year to 30 June
• Access to the accounting file (for example Xero or MYOB), or the full set of business records
• Sales and purchase invoices, and records of assets bought or sold during the year
• Business activity statements lodged during the year and payroll and super records
• Details of dividends paid and any distribution statements issued
• Any loan agreements between the company and its shareholders or their associates
• Trust distribution statements, if the company is a trust beneficiary
• The company's ASIC details, including any changes to directors or shareholders