Corporate Tax 2025: Key Changes for Australian Businesses Ahead

Driving Australia’s Next Wave of Business Growth

Australia’s productivity growth has slowed, and business investment has declined in recent years. To address this, the Productivity Commission (PC) is exploring new reforms that could reshape how businesses operate, invest, and grow. The goal is simple: to build a more dynamic and resilient Australian economy that supports innovation, competitiveness, and sustainable business expansion.

For business owners, understanding these proposed reforms—especially in corporate tax and regulatory efficiency—is essential to staying ahead of change.

Productivity Commission Interim Report 2025

1. Corporate Tax Reform to Encourage Investment

The PC has highlighted that business investment in Australia has fallen significantly over the past decade. A major reason lies in the outdated corporate tax structure, which can discourage reinvestment and expansion.

To stimulate business growth, the PC proposes a modernised approach to corporate taxation that promotes efficiency and competitiveness.

The draft recommendations include:

• • Lower corporate tax rate: Businesses earning under $1 billion could benefit from a 20% tax rate, while larger corporations would continue at 30%.
    
  • New 5% net cashflow tax: Companies would be able to fully deduct capital expenditures in the year they are incurred. This encourages faster reinvestment, boosts productivity, and strengthens business resilience.
    

These potential changes aim to incentivize business investment, make Australian companies more competitive on a global scale, and create a stronger foundation for economic growth.

2. Cutting Red Tape to Enhance Productivity

Many Australian businesses struggle with time-consuming and complex regulations. The PC’s interim report notes that regulatory compliance has become a major barrier to business efficiency.

Examples of the current challenge include:

• • Windfarm approvals in NSW taking up to nine years.

  • Starting a café in Brisbane requiring up to 31 regulatory steps.
    

The proposed reforms seek to:

• • Introduce a whole-of-government approach to streamline and simplify regulation.
    

  • Ensure all regulatory measures are reviewed for their impact on economic growth, competition, and innovation.
    

  • Increase accountability among public servants for ensuring regulations actively support productivity and business development.
    
    

Simplifying regulation would free up time and resources for Australian businesses to innovate, hire, and expand—key drivers of a strong and resilient economy.