Companies pay a flat 25% (base rate entities) instead of personal rates up to 45%. That gap is real, but the money only stays at 25% while it stays in the company.
Rates checked against ATO and official sources on 26 September 2026. How we calculate
Results update as you type.
Tax this year is lower as a company$12,550difference in total tax paid this year
Item
Sole trader
Company
Your salary
—
$100,000
Super on your salary
—
$12,000
Personal tax
$58,870
$22,520
Company tax (25%)
—
$22,000
Tax on super (15%)
—
$1,800
Total tax
$58,870
$46,320
In your pocket now
$141,130
$77,480
Kept in the company
—
$66,000
Money kept in the company is taxed again (with franking credits) when paid to you as dividends. Loans from the company to you fall under Division 7A.
If most of your income is from your own personal effort (e.g. a contractor with one client), the personal services income rules may tax it as yours anyway. A company also costs more to run: ASIC fees, a separate tax return and accounting.
For the company, we assume it pays you a salary (with 12% super) and keeps the rest of the profit. The salary and super are deductible for the company, so company tax applies to what is left.
We compare this year's total tax: company tax + your personal tax on the salary + 15% tax on super. Dividends are not modelled. When retained profit is paid out later, it is taxed at your personal rate, with a credit for the company tax already paid.
A company suits businesses that reinvest profits or have several owners. It usually does not suit a one-person contractor, because of the personal services income rules and Division 7A.
There is no single figure. A company often starts to help when profit is well above what you need to live on, so a large part can stay in the business.
What is a base rate entity?
A company with aggregated turnover under $50 million and no more than 80% passive income. It pays 25% instead of 30%.