A company tax return is not just paperwork. It is a legal declaration to the ATO that carries your name and your liability. Thousands of Australian company directors lodge late, misclaim deductions, or overlook obligations like Division 7A every year — not because they are dishonest, but because they assumed their accountant had it covered. Here is what you need to know to make sure it actually is covered.
Who Must Lodge a Company Tax Return in Australia?
Every company registered with ASIC must lodge an annual company tax return with the ATO — full stop. This applies to trading companies, holding companies, dormant companies (unless formally deregistered), and shelf companies that have never operated. Registered does not mean exempt.
Foreign companies operating in Australia through a permanent establishment also have lodgement obligations. If your company structure is complex — for example, a trading entity owned by a holding company — each entity generally requires its own return.
The only way to exit this obligation is to formally deregister the company with ASIC and receive confirmation. Simply ceasing to trade is not enough.
Company Tax Return Deadlines You Cannot Ignore
The standard 28 February deadline
For companies with a standard 30 June income year, the deadline to lodge is 28 February of the following year. So for the 2024–25 income year ending 30 June 2025, the deadline is 28 February 2026.
The tax agent extension advantage
Companies lodging through a registered tax agent benefit from the ATO’s Tax Agent Lodgement Program — typically pushing the deadline to 15 May. This extension is automatic when you are a client of a registered agent. It is one of the most practical reasons to engage a tax professional: more time, with the same level of compliance.
Penalties for late lodgement
Failure to Lodge (FTL) penalties accrue in 28-day blocks. [STAT – PLEASE VERIFY: For small entities, the current penalty unit is $313 per 28-day period, capped at five periods — a maximum of $1,565.] For significant entities (turnover $25M+), penalties are five times higher. These penalties can be remitted if you have a genuine reason and act quickly, but the request must be made formally.
The Division 7A Problem Most Directors Do Not See Coming
Division 7A of the Income Tax Assessment Act 1936 is one of the most frequently misunderstood areas of company tax in Australia — and one of the most expensive to get wrong.
If your company lends money to a shareholder or their associate (which includes their spouse, children, or related entities), that loan can be treated as an unfranked dividend by the ATO — taxable in the shareholder’s hands, with no franking credits to offset the tax. This applies even if you intend to repay it.
The same treatment can apply to payments made for a shareholder’s personal benefit that are not properly documented as wages or dividends — things like personal expenses run through the company, use of company assets for personal purposes, or forgiven debts.
How to manage Division 7A correctly
There are legitimate structures to manage Director loans. A complying loan agreement with minimum repayment terms and benchmark interest rates can protect you. The key is documentation — verbal agreements and good intentions do not satisfy the ATO. Your accountant should be reviewing Director loan accounts at year end as a matter of course, not flagging problems after lodgement.
Deductions Company Directors Consistently Overlook
Superannuation — only when paid, not accrued
Employer superannuation contributions are deductible for a company — but only when actually paid to the fund, not when accrued in the accounts. Many companies accrue super as an expense and claim it in the wrong year. The ATO is specific: the payment must clear the fund by 30 June to be deductible in that year.
Motor vehicles — the log book requirement
If your company owns vehicles used partly for business and partly for personal purposes, you can only claim the business-use proportion. That means log books for every vehicle, maintained for the required 12-week minimum period. Missing documentation turns a legitimate deduction into an ATO adjustment.
Instant asset write-off — check the current threshold
[STAT – PLEASE VERIFY: For the 2023–24 income year, the instant asset write-off threshold for small businesses (aggregated turnover under $10M) was $20,000 per asset. Thresholds change annually — confirm with your tax agent before purchasing.] Timing purchases before or after year end can significantly affect your tax position.
R&D Tax Incentive — often unclaimed by eligible businesses
If your company conducts eligible research and development activities, you may be entitled to a 43.5% refundable tax offset (for businesses with aggregated turnover under $20M) or a non-refundable offset. Many businesses conducting genuine R&D — including software development, product testing, and process improvement — do not register simply because they do not realise they qualify. [STAT – PLEASE VERIFY]
The Company Tax Rate in Australia
[STAT – PLEASE VERIFY: For the 2024–25 income year, the base company tax rate is 30%. Small business entities with aggregated turnover under $50 million pay a reduced rate of 25% — but only on income from qualifying business activities, not passive income such as rent or interest above certain thresholds.]
Getting the rate correct matters. Using the base rate when you qualify for the small business rate overpays your tax. Using the reduced rate when you do not qualify creates an underpayment liability with interest. Your tax agent should be calculating this every year based on your actual figures — not assuming.
[INSERT QUOTE HERE — Ravi on what surprises new company clients most about their tax obligations]
Frequently Asked Questions
Do I need to lodge a company tax return if my company made no profit?
Yes. The obligation to lodge is tied to company registration, not to profitability. A company that made a loss, had no revenue, or was dormant must still lodge unless it has been formally deregistered with ASIC. Losses may also be carried forward to offset future profits — another reason lodgement matters even in unprofitable years.
What records do I need to keep for a company tax return?
The ATO requires records to be kept for five years from the date of lodgement. This includes invoices, receipts, bank statements, payroll records, contracts, and evidence of all income and expenses. Digital records are acceptable. Good record-keeping is your first line of defence in an audit.
Can my company claim the small business tax rate if we have a trust structure?
Not directly. Trusts are not companies and are taxed differently. However, if a trust distributes income to a company beneficiary, that company’s tax position is assessed based on its own aggregated turnover and activity. This is an area where structuring advice from a chartered tax advisor is essential — the wrong assumption can create a material tax error.
What triggers an ATO audit of a company tax return?
[STAT – PLEASE VERIFY: The ATO uses sophisticated data-matching programs, comparing your lodged return against data from banks, state revenue offices, ASIC, and third-party data providers.] Common audit triggers include expenses that are significantly above industry benchmarks, large unexplained variations between years, high director loan balances, and missing income compared to bank data. An experienced tax accountant structures your return to be defensible — not just filed.
RPS Accountants in Epping handles company tax returns for businesses across Melbourne’s northern suburbs. Whether this is your first year of trading or your fifteenth, our chartered accounting team ensures your return is accurate, complete, and lodged on time. Book a consultation at rpsaccountants.com.au or call 1300 110 120.
