- home
- Our presence in Asia Pacific
- Setting up a company in Australia
Australia is considered an attractive jurisdiction by investors because of its population growth, highly skilled workforce, strong record of economic management and stable governance and regulatory environment.
Additionally, the country is party to a number of Free Trade Agreements (FTAs), for example with the United States, China, Japan and South Korea. As it is close to Asia – the fastest growing region in the world – eight Asian countries are top 10 trading partners of Australia: China, Japan, South Korea, Singapore, India, New Zealand, Thailand and Malaysia. The United States and the United Kingdom complete the top 10.
The country's economy is primarily services based but has a strong resources sector as well. Australia is a major global commodity producer of natural resources, such as coal, iron ore, uranium, lithium, natural gas and gold.
The largest industries in Australia include health and education, mining, financial and service services, construction and manufacturing. Additional significant industries include tourism, scientific and technical services, agriculture, forestry and fishing. As such, Australia offers opportunities for foreign investment in a broad spectrum of sectors.
Foreign investors may establish an Australian presence through the most appropriate form of business structure. The major entity structures used in Australia by both residents and non-residents are:
Additionally, foreign businesses may consider setting up a representative office.
To set up a company, it must be registered under the Corporations Act 2001.
Companies are incorporated with the Australian Securities and Investments Commission (ASIC)
Companies incorporated in Australia will be issued with a unique nine-digit Australian Company Number (ACN).
Subsidiaries (private and public companies) are separate legal entities, whereas a branch office is not. In case of the latter, the parent corporation is therefore liable for all debts and obligations of the Australian branch.
Also known as a private company, the Proprietary Limited company (Pty Ltd) is the business structure most similar to a Limited Liability Company (LLC). It is the most common company structure in the country and is one of the most suitable entities for foreign investors looking to trade in the country.
Incorporating a Pty Ltd company requires at least one resident director. If you don't live in Australia, you'll need to find a director who does or work with a company that can provide a nominee director.
A company secretary is not required for Pty Ltd companies, but should they have one, the company secretary must live in Australia. Both company secretaries and directors must be individuals, not companies.
Pty Ltd companies can be 100% foreign-owned, but must have a registered office in Australia. This may not belong to the company (e.g. the accountant's office), but in that case a written permission to use the address must be kept with the company's records.
Registering a partnership should be done with the Australian Business Register, where you will have to register for an Australian Business Number (ABN). The business name should be registered with the Australian Securities and Investment Commission (ASIC), unless you intend to trade using the partners' names.
For businesses hoping to make an Initial Public Offering (IPO) on the Australian Stock Exchange or wanting to exceed the shareholder limit, a Public Company is the usual business structure to assume.
Public companies in Australia are usually created by businesspeople who want to attract capital from a wider range of shareholders than Pty Ltd companies. Often the management team is separate from the owners of the firm.
This entity type follows a similar incorporation process to that of a Proprietary Limited Company, although you will need at least three directors (including two Australian resident directors) for your registration to be approved, as well as a Company Secretary, and a Public Officer for tax purposes. There is no limit to the number of shareholders you can have.
A partnership is considered a business structure which can be formed by having two or more people that agree to do business together. There are three different types of partnerships:
Each type of partnership pertains to different levels of liability. Different states and territories have their own legislation and regulations. Thus, it is necessary for consideration when establishing a partnership.
A partnership agreement states that the partners will continue the business using a partnership following the terms agreed. The most common approach to a partnership agreement is having a written agreement between the parties stating the details, rights and set of obligations of the partners.
Partnerships in Australia are most commonly used to offer legal and accounting services to clients. They can be set up by general partners who are liable for the partnership's activities or be liable only for their own contribution to the partnership. In order to incorporate in Australia, you will need at least one Australian resident partner; an Australian Investor Visa may help.
The establishment of an Australian branch may be preferable to incorporating a subsidiary if one of the objectives is to consolidate the financial results of the company in the place of residence of the overseas company.
Branches can be considered as an alternative to subsidiaries (private or public companies) for foreign companies looking to do business in Australia. They must follow company regulation, pay tax in Australia and are liable to sue/or be sued.
Subsidiaries (private and public companies) are separate legal entities, whereas a branch office is not. In case of the latter, the parent corporation is therefore liable for all debts and obligations of the Australian branch.
If a foreign company chooses to establish a branch office in Australia, it must be registered as a foreign company under the Corporations Act. The foreign company must lodge an application form with ASIC, with certified copies of the current certificate of incorporation in its place of origin and other prescribed documents. A registered office also needs to be established in Australia and a local agent must also be appointed.
Upon registration, an Australian Registered Body Number (ARBN) will be allocated to the foreign company. Once registered, the branch must file the foreign company's annual accounts and comply with other reporting requirements.
Corporate Income Tax
Individual Income Tax
VAT
The tax authority in Australia is the Australian Taxation Office (ATO).
At first glance, Australia may be seen as slightly unattractive as a result of having some of the highest income tax rates in the world (up to 45% in the top tax band) but the country has received high praise for its ease of paying taxes ranking 28th in PwC's 2020 paying taxes ranking.
The Australian tax year runs from 1 July to 30 June. However, a corporation may apply to adopt a substitute year of income, for example 1 January to 31 December.
A majority of businesses in Australia pay a corporate tax rate of 30 %. However, small businesses pay the "base rate entity" rate of 25% company tax rate (from the 2021-22 income year).
Non-resident companies are taxed on Australian-sourced income at the same rate as a resident company. Payments can be made either monthly, quarterly or annually. Capital gains taxes are also applied to any capital gains made through the disposal of assets.
A base rate entity for an income year is a company if:
The aggregated turnover from any prior income year is irrelevant when working out if a company is a base rate entity for any particular income year.
Generally, the tax return for a corporation is due to be lodged/filed with the ATO by the 15th day of the seventh month following the end of the relevant income year or such later date as the Commissioner of Taxation allows. Additional time may apply where the tax return is lodged/filed by a registered tax agent.
Resident individuals are subject to income tax and capital gains from all sources regardless of their origin, whether in or outside of Australia. A non-resident is usually subjected to tax only from the income obtained from Australian origins and capital gains on taxable Australian property (TAP).
A person is considered a resident of Australia and would be eligible for tax payment for tax purposes if they belong to the following criteria:
It is legally required for all Australian residents to pay a personal income tax on their earnings. The Individual Tax rates for Australian residents in 2022/23 are listed below.
| Taxable income (AUD) | Tax on this income |
| 0 - $18,200 | Nil |
| $18,201 - $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 - $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 - $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
Furthermore, a Medicare levy of 2% is owed on an Australian resident's taxable income. Individuals who lack private medical insurance may have another levy surcharge. Non-residents are not required to pay the Medicare levy. They must pay a marginal rate of 45% on income over A$180,000. The lowest rate for a non-resident would be 32.5%.
Australia has been a more and more attractive destination over the last decade. The employment rate is projected to reach its highest level in more than a decade. And in almost all indicators, the Australian labor market performs as well as or better than its OECD peers.
Although the labor market is open to overseas talent, before foreign nationals are entitled to work and reside in Australia, they must satisfy a points-based immigration system. The visa process is designed to help Australia fill labor shortages in the domestic economy.
Foreign nationals traveling to Australia are required to hold the correct type of visa which corresponds to their purpose of stay and their intended activities. There are different types of visas. Each of them has a specific requirement that the visa applicant must qualify for at the time of application and grant of the visa.
A temporary work visa lets you come to Australia to work for a short stay (up to six months). There might be visa conditions on your visa that only allows specific work or work with a certain employer.
The possible temporary work visas are:
A permanent work visa will let you work full-time in Australia whilst still abiding by certain Visa requirements.
The possible permanent work Visas are:
Fidinam is a private consulting firm founded in Switzerland in 1960. We offer tax advisory, business consulting, real estate services, wealth and estate planning, licensing and compliance, crypto and digital consulting. Our clients include individuals, SMEs and multinational companies in a wide range of industries.
With 250 employees in 16 locations and an extensive network of business partners in 90 jurisdictions, Fidinam provides innovative, personalized service and local expertise on a global scale. Fidinam has more than ten years of presence in Asia Pacific, with offices in Hong Kong, Ho Chi Minh City, Melbourne, Shanghai, Singapore and Sydney. We provide our clients a one-stop-shop solution to set up and grow their business in the region.
Our strength is our people: a multicultural and multidisciplinary team of professionals capable to assist clients with a tailored, dedicated and boutique-style approach to their needs. Our team is up-to-date on evolving regulations, emerging markets and new
technologies.
Fidinam provides a wide range of services for clients in Australia. We support international clients looking to invest and set up a business in Australia through services such as market-entry services, incorporation of the entities, accounting, tax, HR.
Vice versa, we support clients who want to expand their business abroad by leveraging Fidinam’s solid experience, knowledge and network in different jurisdictions.
All content © . All Rights Reserved. Credits
