Business Topics

Brief History of Company Tax Rates

Australia’s company tax rate has shifted from very high post‑war levels to a relatively stable modern regime, with gradual cuts and structural reforms shaping how businesses are taxed today.

Early high-rate era

From the 1970s to the mid‑1980s, Australia relied on a single, relatively high company tax rate, typically in the mid‑40s.

Rates stood at 45% between 1973 and 1979 and 46% from 1979 to 1986, reflecting a broader reliance on corporate tax as a revenue source.

In 1986, the rate peaked at 49%, just as wider tax reforms began to gather pace.scribd+2

Dividend imputation and 1980s–1990s cuts

A major structural shift came with the introduction of the dividend imputation system in 1987, designed to stop double taxation of company profits distributed as dividends.

This was paired with rate cuts: the headline rate fell to 39% in 1988 and then to 33% by 1993, partly financed by broadening the tax base.

The rate increased slightly to 36% from 1995 to 2000, as governments balanced competitiveness with budget needs.

Move to 30% and small‑company relief

In 2000–01, the rate briefly dropped to 34%, alongside the introduction of refundable franking credits, before settling at 30% from 2001.

This 30% rate became the standard corporate tax benchmark and remains the full rate for larger companies today.

From 2017, reforms introduced a lower, stepped rate for smaller “base rate entity” companies, eventually reaching 25% from 2021–22, creating a permanent two‑tier system.