Thinking of doing business in Australia? Here are 5 must-dos before you get started
We are the so called lucky country, so it only makes sense that you would want to migrate/setup business in Australia. The country has a strong economy, a stable political environment, and a highly educated workforce. We have a fantastic lifestyle, we are multicultural, our natural resources are plentiful which all complement offshore investment and business activity in Australia.
The Australian government is also supportive of foreign investment and has made it relatively easy to start and operate a business in the country.
Like everything though, it is important to educate yourself on the obligations of setting up business in Australia and if you intend to move to Australia alongside your business, understanding your personal tax residency will also be an important element to a successful transition.
If you are thinking about doing business in Australia, there are a few things you need to keep in mind:
Choose the right business structure.
There are a number of different business structures available in Australia, such as sole proprietorship, partnership, company, and trust. The best business structure for you will depend on your individual circumstances. By far the most common structure in Australia is a corporate structure.
The company tax rate in Australia is 30%. However, there is a reduced tax rate of 25% for small businesses with an aggregated turnover of less than $50 million and 80% or less of their assessable income from base rate entity passive income.
If you are a large foreign corporate looking to setup a foreign subsidiary company, you will need to be mindful there are additional reporting obligations to the government and Australian Taxation Office. Your business advisor will be able to assist you in satisfying these obligations.
It is common in Australia for foreign companies to setup a subsidiary company in Australia to manage their Australian based operations.
Register your business.
Once you have chosen a business structure, you need to register your business with the Australian Taxation Office (ATO) & if incorporating a company, the Australian Securities and Investments Commission (ASIC). This is a relatively straightforward process but can take time with the strict proof of identity processes.
Obtain the necessary licenses and permits: Depending on the type of business you are operating, you may need to obtain certain licenses and permits. For example, businesses operating in Australia with turnover in excess of $75,000 are required to register for Goods & Services Tax (GST) or what is commonly known as VAT abroad. GST is levied at a rate of 10% of the taxable value of most goods, services, rights and property in Australia. It is important to comply with all Australian laws and regulations that apply to your business. Other examples include tax laws, employment laws, and environmental laws. You can find out more about the requirements on the Australian Government Business website.
Establishing your tax residency in Australia can be complex, especially if you have multiple residency statuses abroad. The Australian Taxation Office (ATO) uses a combination of factors to determine your tax residency, including:
- Your physical presence in Australia
- Your intention to remain in Australia
- Your family and economic ties to Australia
- Your social and living arrangements in Australia
If you meet the 183-day rule (being present in Australia for 183 or more days), you be considered a tax resident of Australia, unless it can be established that both your usual place of abode is outside Australia and you have no intention of taking up residence in Australia. Where you are deemed to be a resident you must pay tax on all of your worldwide income, regardless of whether you earn it in Australia or overseas.
Careful planning can greatly simplify the transition to becoming an Australian tax resident.
So where to from here?
If you are moving to Australia and want assistance establishing your affairs in the country, there are a number of resources available to you. The Australian government offers a number of programs and services to help new arrivals settle in, including information on starting a business.
Two key resources to you are a a business advisor such as MGI Dobbyn Carafa. Business advisors can provide advice and assistance on all aspects of starting and running a business in Australia and help you to navigate the complex process of starting and running a business in Australia and ensure that you are complying with all Australian laws and regulations.
Another way to get help is to contact a migration agent. Migration agents are licensed professionals who can provide advice and assistance on all aspects of immigration to Australia.
Starting a business in a new country can be challenging, but it is also rewarding. With careful planning and preparation, you can increase your chances of success. Our experienced advisors at MGI Dobbyn & Carafa are here to make your transition as seamless as possible.
Useful government & non-government organisation references
- Australian Taxation Office (ATO): The ATO is responsible for administering tax laws in Australia. All businesses in Australia must pay tax, and you must register your business with the ATO.
- The Foreign Investment Review Board (FIRB) is an Australian government body that reviews foreign investment proposals to ensure that they are in the national interest.
- Australian Business Register (ABR): The ABR is a central register of all businesses in Australia. You must register your business with the ABR before you can start trading.
- Australian Government Business website: This website provides a range of information and resources for businesses in Australia, including information on starting a business, growing a business, and complying with Australian laws and regulations.
- Small Business Australia: Small Business Australia is a membership organisation that represents small businesses in Australia. It provides a range of services and support to small businesses, including advocacy, advice, and networking opportunities.
- Chambers of commerce: There are a number of chambers of commerce in Australia that represent businesses in particular industries or regions. Chambers of commerce can provide a range of services and support to businesses, including networking opportunities, training, and advocacy.
- State Revenue Offices will be relevant to you depending on the state or territory you intend on operating and establishing yourself, their function is to collect taxes, duties, and levies from individuals and businesses operating/living in their respective jurisdiction. This revenue is used to fund government services.