Success tips when doing business in Australia in 2023
- Australians value an egalitarian society. Our Client should therefore keep in mind that effective management styles in Australia are those that treat everyone equally regardless of their position in the company hierarchy;
- Despite the remoteness of Australia and its small domestic market, Australian companies actively conduct international business and the country is economically successful with a comparatively high standard of living;
- Government agencies play an important role in day to day Australia business operations and companies deal with government agencies on a regular basis;
- Australians value directness and hence, during business presentations, our Client should be straightforward and transparent.
Interesting facts about Australia
Geography and society
- Australia is the world’s sixth largest country, a vast continent covering 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;
- 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 to review the overall richness of a citizen’s life in the country of study;
- Australia is well ranked as the 13th least corrupt country in the world in the 2015 Corruption Perceptions Index (CPI) by Transparency International;
- According to the 2016 Quality of Living Survey by Mercer Human Resources, Australia offers a high standard of living, with 4 cities in the top 5 within Asia Pacific.
- It is not necessary to give your company a name when doing business in Australia. Your entity name can simply be its Australian company number;
- The Australian Securities Exchange (ASX), the 9th largest in the world, was formed in 1987 through the amalgamation of six independent stock exchanges and became a listed company on 13th October 1998;
- Australia is also ranked positively as the 22nd most competitive country for business, in the World Economic Forum’s Global Competitiveness Report 2015, taking into account factors such as infrastructure, macroeconomic stability, health and education, labour market efficiency and technological innovation.
Frequently asked questions
What is the difference between ABN and ACN?
An Australian Company Number (ACN), is issued only to businesses that wish to register as a limited company. It is a 9-digit number that is issued by the Australian Securities and Investments Commission (ASIC) and is an identifier for ASIC to monitor the company’s activities. It confirms to the public that they are dealing with a limited company.
An Australian Business Number (ABN) is a unique 11-digit number given to any entity that is undertaking any form of business in Australia. It is issued by the Australian Taxation Office (ATO) and its basic function is to allow the government to keep track of your business activity and taxes. It also works as an identifier for other businesses that you may work with.
A company’s ABN will include its ACN followed by two additional digits.
What are the differences between trading name, business name and company name in Australia?
A company name is the official registered name of the business and is required to include the legal terms or abbreviations ‘pty’ and/or ‘ltd’ at the end.
A business name helps customers find, identify and connect with your business. Legal entities must register a business name when they want to trade under a different name from their legal entity (company) name.
A trading name is an unregistered name that businesses used before the introduction of the National Business Names Register in 2012. It is not am officially registered business name. Trading names will be displayed on the Australian Business Register (ABR) till 31 October 2018 for businesses to decide whether to register them.
What are the different entity types in Australia?
There are four main types of business entities recognized in Australia. Below is a summary of each of them:
- Sole trading
Ideal for individuals who wish to trade legally on their own, a sole trading firm is a great option for small businesses. The entity is easier to handle, had less legal and accounting requirements, but makes the trader fully liable.
A company can either be proprietary or public. It is a separate entity from the founders and members and liability is limited by a share capital.
A partnership is a small group of people (no more than 20) who work together and distribute the common revenues between themselves.
A trust’s profit is given to beneficiaries. The trust appoints a trustee to manage assets, conduct business and distribute profits to beneficiaries according to the trust deed. The trustee is liable before the law.
- Sole trading
What is a foreign controlled Australian entity?
Any Australian company, partnership, or trust in which foreign individuals or companies hold a thin capitalisation control interest or a direct control interest is a foreign controlled Australian entity.
Who is a public officer?
A public officer is a company’s representative to the ATO and is responsible for the company’s obligations under Section 252 of the Income Tax Assessment Act 1936. The public officer is responsible for the company complying with the Act and is also liable for the same penalties as the company, in case of any violations.
What are the requirements to hire staff? When can I hire a foreign staff?
- Before hiring a new employee make sure that you know about your responsibilities under the Fair Work Act 2009;
- Employees must be paid at least the minimum wage provided in their award or agreement. If they aren’t covered by an award or agreement, they must be paid at least the national minimum wage. Currently, the Australian minimum wage amounts to AU$18.93 per hour, since July 2018;
- Employers need to meet tax obligations for all workers;
- As an employer, you are responsible for providing a healthy and safe working environment for your employees. You also need to pay worker’s compensation insurance for your employees.
- You need to keep written time and wage records for each employee for at least seven years;
- Any discrimination in the workplace is illegal;
What are the legal requirements for Australia company registration?
The main legal requirements to register an Australian company are as per below:
- A business name;
- A business name;
- A resident director;
- A company secretary;
- A company constitution;
- Share allotment structure;
- A registered business office address.
According to the Corporations Act, the legal obligations also include ensuring company details are kept up to date, maintaining company records and details on the register, and paying the appropriate lodgement fees and annual review fees as required.
How long does the whole company creation process take?
The complete process of registering a business in Australia takes approximately a week to complete, once the i) corporate structure is confirmed and ii) all incorporation documents are prepared and signed and legalized if necessary.
Can an Australian company have foreign shareholders?
Yes, the Corporations Act of 2001 allows 100% foreign ownership.
What is company constitution and when do I need one?
The constitution of a company is a special type of statutory contract between the company, its members, the directors and the secretary. The constitution sets out the various rights of the members and directors, rules relating to the transfer of shares, provisions concerning members’ and directors’ meetings and rules by which the company is to be internally governed. You need a constitution if you are setting up a public company or a proprietary company.
Can an Australia company conduct international business?
A properly structured Australia private limited company is an excellent corporate vehicle through which business in Australia, and internationally, can be conducted.
What makes Australia a good base for international companies?
An Australia company projects an excellent image to your customers, suppliers and potential investors. Australia also permits 100% foreign ownership. In addition, Australia is considered one of the easiest places in the world to do business.
What are the tax incentives associated with incorporating a company in Australia?If income and capital gains have already been taxed in a foreign jurisdiction, then exemptions are available.
What are the negative tax implications of an Australia business?Australia resident company must pay income and capital gains tax on worldwide-sourced income. The Australia corporate tax rate is 30%.
What is the definition of an Australia resident company?A business is deemed to be Australia resident company if it has been formed in Australia; if the company’s central management and administration is in Australia, even if it was formed in another jurisdiction; and if the company conducts business in Australia and its voting control is in the hands of resident Australian shareholders, even though it was incorporated in another jurisdiction or its central management is in another jurisdiction.
Do non-resident companies enjoy and tax benefits?Non-resident companies are taxed only on Australian-sourced income and capital gains on the disposal of certain taxable Australian assets if acquired on or after 20 September 1985. (Capital gains on assets acquired before that date by non-resident entities are usually received free of Capital Gains Tax).
How easy is it to open a corporate bank account for an Australia business?It is easy to open an international corporate bank account.
Are there any non-tax incentives available to investors planning to set up in Australia?The Australian government provides incentives on a case-by-case basis. Incentives include assistance in training, research & development (R&D) and export market development; streamlined immigration procedures; assistance with obtaining information for site selection and introductions to relevant government agencies and professional service providers.
What are the criteria to be eligible for incentives?According to the government-run agency InvestAustralia, the Federal government provides incentives if it considers that a project offers significant economic benefits to the country.
Does an Australia business need to prepare and submit annual accounts?An Australia company must submit annual accounts, tax return and undergo an audit.
How many directors must an Australian company have?Only one director is required.
Does an Australian company need a resident director?To comply with Australian corporations law, at least one company director must be resident in Australia.
Are there any minimum capital requirements to set up an Australian company?There are no minimum capital requirements.
What is the minimum number of shareholders required?There is a public register of shareholders, directors and beneficial owners of every Australian company.