Company Tax Returns
A company is one of the most commonly used structures for growing businesses in Australia and for good reason. It offers limited liability, a flat tax rate, and in most casesreal asset protection opportunities. But it also comes with a layer of compliance that sole traders and partnerships simply don’t face.
At Taxcor, we help companies across Australia to stay on top of their tax and compliance obligations. From preparing your annual company tax return through to ASIC compliance, payroll, and strategic tax planning, we handle it all under a fixed-fee arrangement so you always know what you’re paying.
Limited liability
Flat company tax rate
Business growth opportunity
Asset protection
What Is a Company?
A company is a separate legal entity, distinct from its owners (shareholders) and directors. It can enter contracts, own assets, incur debts, sue, and be sued, all in its own name. This legal separation is the foundation of the limited liability protection a company provides.
Company operations are governed by the Corporations Act 2001 and regulated by ASIC. Directors carry specific legal duties, including acting in good faith, avoiding conflicts of interest, and ensuring the company does not trade while insolvent.
At the end of each financial year, a company lodges its own tax return and pays tax at the company tax rate, generally 25% for base rate entities.
Example:
Tech Innovators Pty Ltd is owned by three shareholders and managed by a board of directors. The company pays tax at 25% on its taxable income each year. Shareholders receive dividends from after-tax profits, and directors receive a salary processed through payroll.
Advantages
Limited liability — shareholders are generally not personally responsible for company debts
Separate legal entity provides asset protection opportunities
Flat company tax rate can be more favourable as profits grow
Better access to capital and investment
Business continuity — the company survives changes in ownership or management
Greater credibility with clients, suppliers, and lenders
Disadvantages
More complex and costly to set up and maintain
Directors can face personal liability in certain circumstances (e.g. insolvent trading)
Higher ongoing accounting and ASIC compliance costs
Profits cannot be distributed as flexibly as a trust structure
Things to Consider
The most important concept to understand when operating a company is that it is a separate legal entity from you as an individual. The company’s assets, liabilities, and income belong to the company, not to the shareholders or directors personally. This separation is precisely what makes the structure valuable, but it also means things must be managed correctly or those protections can be lost.
Directors have significant obligations under the Corporations Act, including maintaining company registers, lodging annual reviews with ASIC, and ensuring the company does not continue trading if it becomes insolvent. Breaching these obligations can expose directors to personal liability.
From a tax perspective, companies must register for an ABN, TFN, and GST (if applicable), lodge BAS, and submit an annual company tax return. Payroll obligations including PAYG withholding and superannuation apply wherever staff or directors receive wages. Fringe Benefits Tax (FBT) may also apply if non-cash benefits are provided to directors or employees.
If the company has multiple shareholders, a shareholder agreement is strongly recommended. Clear documentation around profit distributions, decision-making authority, and what happens if a shareholder leaves can prevent significant disputes down the track.
How We Can Help
We provide end-to-end accounting and tax services for companies of all sizes. Our services include:
Company registration, including ABN, TFN, and GST registration
BAS and IAS preparation and lodgement
Preparation of annual financial statements
Company tax return preparation and lodgement
FBT return preparation and lodgement
Tax planning and minimisation strategies
ASIC compliance and company secretarial support
Bookkeeping and payroll services
Business structure review and advice
Management reporting
Xero, MYOB, or QuickBooks setup and training
Taxable Payments Annual Report (TPAR)
Ongoing software and compliance support
Fixed-Fee Packages
- Fixed annual or monthly pricing, no hidden costs
- Monthly accounting and bookkeeping packages available
- General accounting advice included
- Basic tax planning as standard
Cloud Accounting Software
We support Xero, MYOB, and QuickBooks, and can assist with setup, training, bank feeds, payroll configuration, and ongoing support.
Frequently Asked Questions
Do companies need to lodge a tax return?
Yes. Every company must lodge an annual company tax return with the ATO, reporting all business income, deductions, and tax liabilities for the financial year.
What tax rate does a company pay?
The tax rate depends on your company’s turnover and whether it qualifies as a base rate entity. Most small businesses pay 25%. Larger companies pay 30%. We can help confirm which rate applies to your situation.
Can I pay myself wages or dividends from the company?
Yes. Directors can receive remuneration through wages (processed through payroll with PAYG withholding and superannuation), dividends from company profits, or a combination of both. Getting the split right has significant tax implications, and we can help you structure this in the most effective way.
What happens if the company lodges its return late?
Late lodgement can trigger failure-to-lodge penalties and interest charges from the ATO. For companies, these penalties can be higher than for individuals. Staying on top of due dates is important.
Can you help with overdue company returns?
Yes. We assist companies that have fallen behind on lodgements, whether it is one year or several. We’ll organise your records, prepare outstanding returns, identify available deductions, and liaise with the ATO to bring your affairs up to date.
How long must companies keep financial records?
The ATO generally requires companies to retain financial and business records for at least five years.
What is BAS and do companies need to lodge it?
A Business Activity Statement (BAS) is used to report GST, PAYG withholding, and other tax obligations. Companies registered for GST must lodge BAS monthly or quarterly, depending on turnover and reporting requirements.
Can companies claim business expenses?
Yes. Companies can generally deduct expenses directly incurred in earning business income. This includes wages, rent, equipment, professional fees, insurance, vehicle costs, software subscriptions, and depreciation on business assets, among others.
What if company and personal expenses are mixed?
A company is a separate entity, and mixing company funds with personal expenses creates compliance risks, bookkeeping problems, and potential tax issues. Separate bank accounts for the company are essential. If personal expenses have been paid through the company, these may also trigger Div 7A loan account issues.