Strong markets, a wealthy economy and an educated workforce all make Australia one of the world’s most attractive expansion prospects for businesses and investors alike. While companies are required to register an Australian business before they can begin trading in the country, favourable tax laws and protected legal positions mean businesses here enjoy extensive protection and greater profit margins.
When you are looking to bring your business to Australia, there are a few key points to consider before making any moves. Answering a few simple questions ahead of time can help set your business up for success and avoid the pitfalls of entering the country improperly.
1. What is your reason for establishing a presence in Australia?
Before you can make any other decisions, you will need to identify the reason your business wants to invest in Australia. Corporation-friendly tax laws and the range of available business structures means that choosing how to establish your company should be done carefully. Making the right choices can set you up for long-term success, while the wrong choice could prove to be a costly headache.
Are you coming to Australia to trade your products and services? Are you making an investment in the country by establishing a business here? Do you own local real estate or need access to employees and infrastructure? Consider what you want to achieve and use that information to help make further decisions about your move to Australia.
2. Decide on a business structure
Australia offers four common types of business structure: sole traders, partnerships, trusts and companies. Additionally, foreign businesses may be eligible to operate in Australia as a Foreign Entity.
The structure you choose depends on what your business does and how large the company is. Within Australia, “companies” are the most common business structure because they enjoy favourable taxation and legal positions while providing legal and financial protection to the owners and shareholders. If you are seeking to establish a physical location on Australian shores, chances are you will want to register with the Australian Securities and Investments Commission (ASIC) as either a public or private company.
Deciding on a business structure may also depend on the way you want to operate in Australia. It is common for foreign companies to simply acquire or invest in an Australian business and adopt their existing structures as a subsidiary. Otherwise, it can make better sense to establish an Australian branch company. A branch will act as part of the parent company, a subsidiary will function as a completely separate entity for legal and tax purposes.
3. Will the company be listed on the ASX?
A listing on the Australian Stock Exchange (ASX) can open many doors for foreign companies wanting to establish themselves in Australia. The ASX offers a globally-recognised listing that provides access to capital, liquidity and market visibility that is difficult to obtain any other way.
A listing on the ASX is typically reserved for larger businesses who can meet the minimum requirements:
- 300+ non-affiliated investors/shareholders
- $600,000+ of investment
- 20% free float
- Minimum profit and asset tests
It is also a requirement that the Australian branch of your business is registered with ASIC as a public company. In Australia, only public companies are permitted to raise funds from external shareholders via a listing on the stock exchange.
4. Do your legal and tax due diligence
It goes without saying, but seeking advice from local consultants, accountants and solicitors prior to establishing an Australian business is critical.
Due to the favourable nature of Australia’s corporate tax and legal climates, there could be serious monetary benefits – or pitfalls – that come along with choosing the correct company structures. The country’s legal system is also careful to ensure all new businesses are properly registered and compliant, and large fines may be issued to companies trading improperly on Australian shores.
To get the most from your Australian branch or subsidiary, you should consult a corporate tax agent and seek their advice on how best to structure your business and approach the reporting and taxation of any Australian income.
Ready to establish your business in Australia? Contact Australian Corporate Governance today!
Having an Australian branch of your business can be a major boon to companies of all shapes and sizes. If you are investigating Australian markets or are ready to establish your business here, Australian Corporate Governance can help. Our team can guide you through the process, offering advice and access to industry experts who can help you establish a local and fully compliant subsidiary or branch. Get in touch with us today to find out more.