Australia is a popular country for overseas businesses to operate in. It is the 14th largest economy in the world, has a highly educated workforce and is rated 14th in the World Bank Doing Business index on the ease of doing business.

Australia is a common law country. Companies are subject to Federal corporate law, although states may also determine laws that apply to businesses operating in that state.  Income tax is applied at a Federal level, as is GST. There are no income tax or sales taxes at a state level. The main state tax that applies to businesses is payroll tax.

This guide has been prepared to assist business looking at operating in Australia.

What type of entity should I use?

As a foreign investor, there are several important considerations when deciding how to establish a business in Australia. Although Australia has various types of structures available for establishing a business, the most common types of entities used by foreign investors operating in Australia are a (Pty Limited), or branch of a foreign company…

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What registrations will I need?

The corporate registrations required will depend on the type of entity. All Australian registered companies will have an Australian Company Number (ACN) whereas Australian branch operations will usually require an Australian Registered Body Number (ARBN). All entities operating a business will require and Australian Business Number (ABN)…

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What tax rates apply?

The general company tax rate for income tax in Australia is 30%. However, small-to-medium companies are taxed at 26% with the tax rate reducing to 25% by FY22. Companies are required to pay their income taxes in instalments throughout the year. These instalments are paid either monthly or quarterly…                                                                                                                                 

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What lodgements will I need to submit?

Key tax lodgements include an annual income tax return, and a periodic (monthly, quarterly or annually) activity statement to report PAYG withholding and GST, income tax instalments, fringe benefits tax instalments and some other taxes…                                          

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Will I be subject to income tax?

All Australian registered companies will be subject to income tax on their worldwide income. This is subject to some exemptions for income derived from foreign subsidiaries and branch operations (a participation exemption)…                                                    

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Will I need to pay GST?

GST is a broad-based consumption tax that applies to the supplies of most goods and services.  The GST rate is 10%.  Businesses are required to remit GST to the ATO on supplies that they make and are generally entitled to claim a credit for GST included in the price of acquisitions that they make…                                        

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What are an employer’s employee related obligations?

If an employee is going to have employees in Australia, either local hires or expatriates, a series of tax and other obligations will arise…                                                                                            

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Will I need to get an audit?

Australian registered companies are required to prepare audited annual financial statements and lodge these with ASIC if the company is a large proprietary company. Small proprietary companies do not need an audit…                                                                                                                                  

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What incentives are available?

The Research and Development Tax Incentive is available to Australian companies conducting experimental research and development activities that may benefit the wider Australian economy…  

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What tax planning should I consider?

Australia has strong transfer pricing laws and robust general anti-avoidance provisions, so much of the tax planning that may be appropriate in other jurisdictions will not be appropriate in Australia…                                                                                                                                                                                                     

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What are the foreign investment restrictions?

Australia has limited restrictions on foreign investment and no exchange controls.  The main limitation is on non-residents acquiring real property in Australia, where approval by the Foreign Investment Review Board may be required…                                                                                                                                                          

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What are the special rules for larger multi-nationals?

Australia has implemented Country by Country Reporting (CBCR) for large multinationals operating in Australia. Entities part of an accounting consolidated group with more than A$1bn in global annual turnover are considered a ‘significant global entity’ (SGE) and subject to CBCR and other additional tax obligations…

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We’re in your corner

From time to time, even the most successful business owners face challenges and unforeseen complications. Having the support of an experienced team is crucial in times of adversity.

Australian Tax Office (ATO) & State Revenue Office (SRO) Audits & Reviews
While ATO and SRO audits are a necessary part of an effective tax system, they can be expensive and disruptive for a business. We can manage the whole process on your behalf, including ATO/SRO and third party communication.

Financial distress
The concerns around solvency can result in both financial and emotional stress for all involved. With the right advice, however, financial distress does not have to mean the end of the business. Our specialist Business Recovery team aims to help businesses in trouble as early as possible, helping them to restructure and trade out of hardship.

Forensic accounting and litigation support
Commercial litigation and other disputes are seldom simple and often involve highly complex issues. Our specialist Forensic Accounting team combines a solid understanding of the litigation process with technical investigative skills to provide support across a range of circumstances including valuation disputes, quantification of losses, family law matters and fraud cases.

Have any questions on entering the Australian business market? Contact us today.

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