The tax return for a private company is usually prepared in an afternoon once the books are right. Getting the books right is where the work is, and it's also where the expensive mistakes are made: director spending left in a loan account with no agreement, dividends franked at the wrong rate, assets expensed that should have been depreciated. These don't show up when the return is lodged. They show up in an ATO review three years later.
Here's how we prepare a company return, the issues we check every year, and the deadlines for 2026–27.
What does a company tax return involve?
The return is the last step. Before it, we prepare the company's financial statements and work through the tax adjustments. A typical private company return covers:
| Area | What we do |
|---|---|
| Financial statements | Profit and loss, balance sheet and notes, prepared from reconciled Xero data. See our financial statements service |
| Tax reconciliation | Adjust accounting profit for non-deductible items (entertainment, fines), timing differences (provisions, prepayments), depreciation and capital gains |
| Company tax rate | Test whether the company is a base rate entity for the year |
| Assets | Depreciation schedules, instant asset write-off and pool balances |
| Losses | Carry-forward tests and, from 2026–27, the loss carry-back option |
| Franking account | Reconcile credits and debits, check for franking deficit tax |
| Division 7A | Review every payment, loan and debt forgiveness involving shareholders and their associates |
| Dividends | Resolutions and distribution statements |
| Related schedules | Dividend and interest schedule, losses schedule, international dealings where relevant |
Our annual financials review agent compares three years of the company's numbers and flags what to query before the return: unexplained movements, loan accounts going the wrong way, margins out of line with prior years. An accountant works through the flags with you.
Is your company a base rate entity?
For 2026–27, the company tax rate is 25% for a base rate entity and 30% for everyone else. A company is a base rate entity for a year if both of these are true:
- Aggregated turnover is under $50 million. Aggregated turnover includes connected entities and affiliates, not just this company.
- No more than 80% of its assessable income is base rate entity passive income, such as dividends and franking credits, interest, rent, royalties and net capital gains.
| Company type | Usual rate |
|---|---|
| Trading company, turnover under $50 million | 25% |
| "Bucket" company receiving mostly trust distributions of business income | Depends on what's in the distribution; test each year |
| Company holding an investment portfolio or rental property | 30% |
| Trading company that sold its business and now earns interest | Often 30% in the year after sale |
The rate matters twice: once for the tax the company pays, and again for how much it can frank dividends. The maximum franking rate for a year is worked out using the prior year's turnover and income, so a company can pay tax at 30% but frank at 25%, or the other way around. That mismatch can leave franking credits stranded. Our guide to the company tax rate explains the test in detail, and our guide to the bucket company explains why the passive income test matters for companies that receive trust distributions.
How do franking and dividend statements work?
When a company pays tax, it builds up franking credits. When it pays a franked dividend, those credits pass to the shareholder, who gets credit for the company tax already paid.
Example: a base rate entity makes $200,000 of taxable profit and pays $50,000 tax at 25%. It later pays a fully franked dividend of $75,000. The franking credit attached is $25,000 ($75,000 × 25 ÷ 75). The shareholder includes $100,000 in their income and gets a $25,000 credit against their tax.
What we handle:
- Franking account reconciliation. Our franking account agent rebuilds the account from tax payments, refunds and dividends paid, and flags any franking deficit at 30 June, which would trigger franking deficit tax.
- Dividend resolutions and statements. Our dividend statements agent drafts the directors' resolution and the distribution statement, with the franking percentage and amounts. Private companies must give shareholders a distribution statement within four months after the end of the income year in which the dividend was paid.
- Planning the timing. Paying dividends in a year when a shareholder's other income is low can reduce total family tax. We model this before 30 June, not after.
What is Division 7A, and why do we check it every year?
Division 7A treats money a private company pays, lends or forgives to a shareholder or their associate (a spouse, relative or family trust) as an unfranked dividend, unless an exception applies. The most common exception is a complying loan.
To be a complying loan, the agreement must be in writing before the company's lodgment day (the earlier of the return's due date and the date it's actually lodged), carry interest at least at the benchmark rate, and run no longer than 7 years unsecured or 25 years if secured by a registered mortgage over real property meeting the value test. Each year, the borrower must make a minimum yearly repayment.
The benchmark interest rate for 2026–27 is 8.77%.
A worked example
A director borrowed $100,000 from their company in 2025–26 and signed a complying 7-year unsecured loan agreement before the company's lodgment day. The first minimum yearly repayment falls due by 30 June 2027, calculated at the 2026–27 benchmark rate of 8.77% over the full 7-year term: about $19,716. If less than that is repaid by 30 June 2027, the shortfall is treated as an unfranked dividend to the director.
Our Division 7A agent calculates the minimum repayment, the benchmark interest and the company's distributable surplus, and prepares the workings; your accountant checks it and explains the options. The usual options are to repay in cash, declare a dividend and offset it against the loan, or pay salary and offset that. Each has a different tax cost, and we model them before 30 June. Our Division 7A guide goes through the rules.
Watch out: In Bendel, decided by the High Court in 2026, the court held that an unpaid trust distribution owed to a company is not by itself a Division 7A loan, and the ATO has said it will withdraw its earlier view. That doesn't make every trust-to-company arrangement safe. Other integrity rules, including section 100A, still apply, and loans already put on complying terms remain loans. Don't unwind anything without advice.
When is the company tax return due?
For 2025–26 returns lodged through a registered agent under the 2026–27 lodgment program, the common dates are:
| Company | Lodge by | Pay by |
|---|---|---|
| Prior-year returns outstanding at 30 June 2026 (if all are lodged) | 31 October 2026 | 1 December 2026 |
| Large and medium taxable companies | 31 January 2027 | 1 December 2026 |
| Total income over $2 million in the latest year lodged (not large or medium) | 31 March 2027 | 31 March 2027 |
| Most other companies | 15 May 2027 | 15 May 2027 |
| Companies with a 15 May date that are non-taxable or due a refund in both years | 5 June 2027 | n/a |
A company lodging without an agent, or not on an agent's list by 31 October 2026, generally has an earlier date. The ATO can also set an earlier date for a particular company. Our compliance calendar shows how the return fits with BAS, FBT and ASIC dates.
What changed for companies in 2026?
- Tax loss carry-back is back. Under the Tax Reform No. 2 Act 2026, an eligible corporate tax entity can carry back revenue losses from 2026–27 onwards against tax paid in either or both of the two previous years and receive a refundable offset, limited by its franking account balance. It's worth modelling if your company had a strong 2025 or 2026 and a weaker 2027.
- The $20,000 instant asset write-off continues for small businesses with aggregated turnover under $10 million, per asset, for 2026–27. Our guide to the instant asset write-off has the conditions.
- The 2026 tax reform package didn't change company tax rates or franking. The CGT changes from 1 July 2027 apply to individuals, trusts and partnerships, not companies, which never had the 50% discount. The full picture is in our guide to the 30 June 2027 tax changes.
What mistakes do we see in company returns?
- Director loan accounts with no agreement. The most expensive Division 7A problems start as "I'll sort it out at year end".
- Private expenses paid by the company and coded as business costs. They're either a loan to the director, a dividend, or a fringe benefit. They're never simply a deduction.
- Franking at the wrong rate. Usually from not applying the prior-year test.
- Dividends declared with no resolution or statement. Paperwork after the fact is weak evidence.
- Ignoring the passive income test. Common for bucket companies and companies that have sold their business.
What does it cost?
The company tax return and annual financial statements are included in our Compliance Essentials plan (from $149 per week + GST), along with bookkeeping and BAS lodgements. If you only need the year-end work, we'll quote a fixed fee based on the state of the books and the number of related entities. See our pricing page.
What should you send us?
- Xero access, or your trial balance and general ledger
- Last year's company return, financial statements and depreciation schedule
- Loan agreements with directors, shareholders and related entities
- Details of any dividends paid and minutes or resolutions
- Asset purchase and sale invoices
- ASIC annual statement and share register
- ATO correspondence, including PAYG instalment notices
Frequently asked questions
Can I lodge a company tax return myself?
A director can lodge the company's return through ATO online services, and some small companies do. The return itself is the easy part. The judgment calls are in the financial statements behind it: loan accounts, asset write-offs, provisions, franking and Division 7A. Mistakes in those areas tend to surface years later and cost far more than the fee saved.
What happens if my company doesn't make a profit?
The company still has to lodge. A tax loss can generally be carried forward to future years if the company passes the continuity of ownership test or the business continuity test. For revenue losses from 2026–27 onwards, an eligible company may also be able to carry the loss back against tax paid in the two prior years and get a refund, limited by its franking account balance.
Is the company tax rate 25% or 30%?
25% if the company is a base rate entity: aggregated turnover under $50 million and no more than 80% of its assessable income is passive, such as rent, interest and dividends. Otherwise 30%. An investment company holding only shares or property will usually be taxed at 30%.
Do I have to pay dividends from my company?
No. Profit can stay in the company and be taxed at the company rate. Many owners pay dividends only when they need the cash, or to keep personal tax brackets even across years. What you can't do is take money out as an undocumented loan without Division 7A consequences.
When does the company have to pay its tax?
Most companies pay through PAYG instalments during the year and settle the balance when the return is due. Companies whose returns fall due under the agent lodgment program usually pay on that due date, while larger companies pay on 1 December even though their return is due later.
My company is dormant. Does it still need a return?
Generally yes, unless the ATO has told you in writing that a return is not necessary. Dormant companies also still have ASIC annual review fees. If the company has no future purpose, voluntary deregistration may be cheaper than keeping it alive.
Official sources
General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.