Insights · Structure · 31 October 2026

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Sole trader or company in 2026–27: when does it make sense to switch?

Many Brisbane businesses start as sole traders. As profits grow, the question comes up: should we be a company? The tax rates are only part of the answer.

The rates side by side (2026–27)

• Individuals (residents): nil to $18,200, then 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus the 2% Medicare levy.
• Companies: 25% for a base rate entity (aggregated turnover under $50 million and no more than 80% passive income), otherwise 30%.

Why the lower company rate is not the whole story

• Profit taken out of a company as wages or dividends is taxed at your personal rate, with franking credits for company tax already paid.
• Money a company lends to you is caught by Division 7A: see Division 7A loans 2026–27.
• A company costs more to run: ASIC fees, a separate tax return, director duties and director ID.
• Directors can be personally liable for some unpaid company tax and super: director penalty notices.
• Companies do not get the 50% CGT discount.

When it is usually worth a look

• Profits consistently above what you need to live on, so some can stay in the business.
• You want to bring in a partner, investor or key staff with equity.
• Your industry carries real liability risk.

Moving existing business assets into a company can trigger CGT and stamp duty, so plan the move. Compare structures in company vs trust, or book a structure review.

Quick answers

What is the company tax rate for small business in 2026–27?

25% for a base rate entity with aggregated turnover under $50 million and no more than 80% passive income; otherwise 30%.

What are the 2026–27 personal tax rates?

Nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus the 2% Medicare levy.

Sources

• ATO: Tax rates, Australian residents
• ATO: Company tax rates
• business.gov.au: Business structures

General information only. This article does not take into account your circumstances and is not tax, legal or financial advice. Rates and rules change; check the sources above and get advice for your business before acting.