For over a decade, Healy Consultants has efficiently and effectively assisted our local and international Clients set up Australian companies and launch their Asian business. The following information will assist your Firm determine whether Australia company formation is the optimum corporate solution to fulfill your international business objectives:
a)
AdvantagesAdvantages of Australia company registration
Company formation in Australia is simple and fast. It requires a minimum of one director and one shareholder. Registration of an Australian limited liability company (LLC) allows 100% foreign ownership and it has no minimum capital requirements.
An Australian company can conduct business throughout Australia without needing to register in individual states and territories.
Australia promotes free trade and has concluded trade agreements with multiple countries including New Zealand, Thailand, Singapore and the US.
Because of the excellent image provided by an Australian business, Australia company incorporation is a suitable corporate vehicle to promote to clients, suppliers, investors and venture capitalists.
Foreign investors starting a business in Australia can obtain government incentives, for example through Austrade, which is the Australian Government's trade and investment development agency. Austrade helps international companies source goods and services from Australia. Austrade also identifies potential investment projects and strategic alliance partners.
b)
DisadvantagesDisadvantages of Australia Company Registration
In accordance with the Australia Corporations Act 2001, Australian company incorporation requires at least one director who is ordinarily resident in Australia. Healy Consultants can act as the nominee Australia-resident director.
Domestic and international income suffers corporation tax at 30%. Furthermore, every company is required to submit annual audited financial statements and a corporate tax return to the Australian Taxation Office (ATO). If the company’s sales revenue is less than AUD100,000, an audit exemption will be granted.
A public register of shareholders and directors is publicly available. Although this limits privacy, this Australia company register enhances commercial transparency in Australia.
c)
10 steps to incorporation10 steps to incorporation in Australia
d)
Employment visasAustralia employment visas
Migration to Australia is a long, expensive and complicated process. Australian Authorities are strict and demanding regarding qualifications and wealth of the applicants. Healy Consultants fee for business visa for Australia amounts to US$5,250.
Business people planning to enter Australia for a short business visit can apply for the Business (Short Stay) visa which allows a stay of up to three months in Australia on each visit.
Under the Business Skills program, business people can apply to come to Australia to i) start their own business, ii) manage a new or existing business, or iii) make investments in Australia without the need for a sponsor. Healy Consultants will be pleased to help our clients to apply for Australian Business Skills visas. These visas are available to:
business owners
senior managers of businesses who meet relevant requirements
senior executives of major businesses who meet relevant requirements
successful business owners or investors wishing to invest funds in a Government Investment for at least four years
After a minimum of two years business visas holders may be eligible to apply for a permanent visa.
e)
Business entity typesAustralia business entity types
Healy Consultants will assist our Client set up the optimum Australian corporate structure.
Comparison of different types of corporate structures:
Type of Company
Pty Ltd
Branch
Partnership
Minimum number of shareholders requierd
1-50
-
2 to 20 partners is required
Minimum number of directors required
1-25
-
-
Australian resident director required
Yes
Resident local agent is required
-
Australian resident public officer required
Yes
-
-
Australia company secretary required
No
-
-
Australia registered office required
Yes
Yes
Yes
Annual return required
Yes
Yes
Yes
Submit annual tax return
Yes
Yes
Yes
Accouns have to be audited
Yes if sales revenue is more than AUD100,000
Upon request
Yes if sales revenue is more than AUD100,000
Disclosure of beneficial ownership to Australian authorities
Yes
Yes
Yes
Corporate directors allowed
No
-
-
Australian Business Number (ABN) registration
Yes
ABN will be issued instead
-
TFN registration
Yes
Yes
-
GST registration
Yes if sales revenue is more than AUD75,000
Yes if sales revenue is more than AUD75,000
Yes if sales revenue is more than AUD75,000
Corporate tax rate
30%, taxed only on Australian worldwide income
30%, taxed only on Australian branch income
46.5% personal income tax on each partner
Withholding tax rate
30%
30%
30%
Annual return fee
AUD227
AUD1063
-
Advantages
Most common structure in Australia
Taxed only on Australian branch income
1) Easy to setup
2) Less reporting requirements
Disadvantages
1) More reporting requirements
2) Resident director and public officer are required
More complex and costly to setup
1) Lack of continuity
2) Difficulty in ownership transfer
Limited liability company
This is the most common entity used to conduct business in Australia. It is also known as a limited liability proprietary company (Pty). As always, the company is a separate legal entity or 'person'. In particular, a company is separate from its owners, shareholders and the persons who run it, the directors.
Australian Branch
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 parent company.
An overseas company may register itself in Australia to operate as a branch, instead of as a subsidiary. The branch must formally establish a registered office in Australia and appoint a local resident agent. The branch must submit annual financial statements with ASIC.
Representative office
Where a foreign company does not intend to carry on business in Australia it may seek to establish a representative office. Such an office must however only engage in activities which will not amount to carrying on business, for example market research.
Companies limited by guarantee
Instead of shareholders and paid up share capital, this company comprises members who place a guarantee on the company which is only enforced on the winding up of the company. Often non-profit companies and charities use this method.
Unlimited liability companies (partnerships)
An entity whose members have no limit placed on their individual liability to contribute to the debts of the company. The sole advantage is this company can distribute profits without restriction.
Public Companies
A public company usually comprises more than 50 shareholders and a minimum of 3 directors, 2 of whom must ordinarily reside in Australia. This entity type is subject to more stringent regulatory provisions.
Private Superannuation Trustee Company
The sole purpose of this company is to act as a trustee of a regulated superannuation fund within the meaning of s19 of the Superannuation Industry (Supervision) Act 1993.
Not-for-profit Company
This company is for charitable purposes only and its constitution will i) require the company to apply its income in promoting those purposes and ii) prohibits the company making distributions to its members and paying fees to its directors.
Sole trader
The business is run by one person, all decisions are made by this person but staff can still be hired. Sole traders do not enjoy limited liability and personally liable for all debts of the business.
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FeesAustralia business registration fees
The average fee per Australia engagement amounts to AUD$6,650, which includes company registration, opening corporate bank accounts, providing a resident director and virtual office address, and GST and ABN registration. Refer to draft invoice embedded in the icon below:
The average Australian engagement period is 7 weeks as outlined below:
Step
Service
Duration
1.
Engagement Planning
1 week
2.
Company Incorporation
1 week
3.
Corporate bank account approval
3 weeks
4.
Corporate internet banking approval
2 weeks
Total engagement period
7 weeks
g)
Compliance requirementsCompliance requirements for Australia companies
During the Australia company registration process, Healy Consultants Compliance Department guides our Client through legal and tax obligations.
Every Australian business must lodge an Annual Return in which a director or secretary of the company confirms relevant details for the Australia companies register including names and addresses of all directors, address of principal place of business and details of shareholders and their shareholdings.
A company secretary is not required when forming a company in Australia, however we recommend one be appointed to ensure compliance with corporation act.
The identities of shareholders and directors are on the Australian business register (ABR), which enhances commercial transparency. A search of the Australia company registers is available on the Australian Business Register (ABR) website.
When starting a business in Australia it's important to find out what registrations and licences apply to your Firm. This can be complex area; as local, state, territory and federal governments handle registration and licensing for various aspects of your business.
For an Australian registered company to be listed on the national stock exchange, the ASX must be satisfied with i) the profit/asset test ii) the shareholders spread and iii) the prospectus memorandum.
Accounting and taxAccounting and tax considerations
Australian companies are taxed at a flat company tax rate of 30% for both domestic and international income streams. In contrast, individuals are taxed at the normal marginal rates of tax - with the top tax rate being 46.5%.
Audited financial statements and a corporate tax return must be submitted annually to the Australian Taxation Office. It is usually possible to obtain an audit exemption if turnover is less than $100,000.
Goods and Services Tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. Registration for GST is compulsory for companies who turn over more than $75,000 per annum. Once registered for GST, a company can charge GST on the products and services it provides and also claim back GST against expenses made for the business.
Following company registration, a company public officer must be appointed. A public officer is a company's representative to the ATO and is responsible for the company complying with the Tax Acts. The public officer must be an Australian resident and does not need to be a director of the company. Usually, our Clients appoint Healy Consultants as the public officer.
If fully franked dividends (that is, dividends derived from profits on which Australian corporate tax has been paid) are paid by an Australian subsidiary to its foreign parent, no dividend withholding tax is payable. To the extent that dividends are unfranked, dividend withholding tax of 30 per cent (or as reduced under the relevant double tax treaty) is payable on the gross unfranked amount.
If an Australian company pays royalties to a foreign resident, the royalties will be subject to royalty withholding tax at the rate of 30 per cent (or as reduced under the relevant double tax treaty) and may give rise to transfer pricing issues.
The Australian Tax Department has a system called Controlled Foreign Companies (CFC). A foreign company that is controlled by an Australian resident will be taxed as an Australian company. The system was put in place to prevent Australian residents accumulating wealth in offshore jurisdictions and not paying tax by holding it in companies or trusts. Unless the company is operated through a permanent establishment in the foreign country, the income is taxable for the Australian residents.
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Success tipsSuccess tips on doing business in Australia
k)
Support servicesOther Australia company registration support services
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Did you knowDid you know about Australia?
Australia is the world's sixth largest country, a vast continent covering a distance of approximately 3,700 kilometers from its most northerly point to its most southerly point and is almost 4,000 kilometers wide from east to west. Australia is comprised of six states and two territories. China is Australia’s largest trading partner.
It is not necessary to give your Australian company a business name. The name of your company can simply be its Australian company number.
The ASX was formed in 1987 through the amalgamation of six independent stock exchanges and became a listed company on 13 October 1998. On 25 July 2006, the Australian Stock Exchange Limited merged with Sydney Futures Exchange (SFE) Corporation Limited, making the combined entity the 9th largest listed exchange in the world. The exchange is an ideal venue for trading both Australian securities and foreign issues, and is one of the stock exchanges considered by multinational firms looking to conduct IPOs.
Australia is well ranked as the 8th least corrupt country in the world in the 2011 Corruption Perceptions Index by Transparency International.
According to the 2011 Quality of Living Survey by Mercer Human Resources, Australia offers a high standard of living, with 3 cities in the top 5 within Asia Pacific.
As evidence of this, in the World Bank's Doing Business 2012 Survey, Australia ranks 15th. For the key factor of starting a business, Australia is ranked as the 2nd easiest jurisdiction, after New Zealand.
Australia is also ranked positively as the 20th most competitive country for business, in the World Economic Forum's Global Competitiveness Report 2011-2012, taking into account factors such as infrastructure, macroeconomic stability, health and education, labour market efficiency, technological readiness and innovation.
Australia benefits from a relatively high GDP, a reputable education system and high life expectancy rates. As support for this, Australia is currently ranked as having the second highest Human Development Index (HDI) in the world. the HDI is an annual report undertaken by the United Nations.
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