Company tax (or corporation tax) is the tax levied on a company's taxable income. Rates vary by country and sometimes by company size.
Company tax is the tax imposed on the profits of incorporated businesses. Unlike sole traders (who pay individual income tax on business profits), companies are separate legal entities that pay tax at corporate rates. Current company tax rates include: Australia 25% for base rate entities (turnover under $50 million) and 30% for others, UK 25% main rate (19% for small profits under GBP 50,000), US 21% federal rate, Canada varies by province (approximately 15% federal for small businesses), Singapore 17%, Ireland 12.5% and many others. Company tax is calculated on taxable income (accounting profit adjusted for tax differences) and paid annually or in instalments. Companies must lodge annual tax returns and may need to make provisional or instalment payments throughout the year. Understanding your company tax rate and obligations is essential for cash flow planning and tax minimisation strategies. SortBooks accurately tracks revenue and deductible expenses in Xero to ensure your company tax calculation is based on correct data.
SortBooks helps with the bookkeeping behind company tax by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing company tax by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Taxable income is your total assessable income minus all allowable deductions. It is the amount on which your income tax is calculated.
A tax return is the formal document lodged with your tax authority reporting your income, deductions and tax payable for a specific period, usually annually.
A tax deduction is an expense that reduces your taxable income, therefore reducing the amount of tax you owe. It must be incurred in earning your assessable income.
Business structure refers to the legal form of your business entity. Common structures include sole trader, partnership, company, trust and cooperative.
The financial year (or fiscal year) is the 12-month period your business uses for accounting and tax reporting purposes. It may or may not align with the calendar year.
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