Australia provides for many years a low-risk business environment and top innovation through all dynamic industries that attract foreign investments in a large amount. Being the 13th largest economy in the world, and offering stability and adaptability in terms of business, Australia might represent the proper destination for foreigners looking for company formation and long-term investments. Our company formation agents in Australia are at the disposal of both domestic and foreign entrepreneurs who want to thrive and generate profits by forming and expanding their companies and activities in Australia.
What types of companies can I open in Australia?
Foreign investors as well as local businessmen can set up various types of companies in Australia, depending on their available capital, the type of liability they want to assume, the rights and the obligations they will have, etc. In respect to the Corporations Act 2001, foreigners in Australia can set up the following types of companies:
- a proprietary company (Pty) – the preferred form of business in this country;
- public limited liability companies and unlimited public companies;
- legal entities created for the Australian mining sector;
- one can also open a company in Australia as a sole trader/partnership.
No matter the business structure you choose in Australia, we invite you to get in touch with our company incorporation specialists in Australia for in-depth information and assistance at the time of company registration. Our team can also help you open bank account online in Australia.
| Quick Facts | |
|---|---|
| Types of companies | Sole trader Limited company (private or public) Partnership Trust Co-operative Joint venture.; |
| Minimum share capital for LTD Company | No capital requirements |
| Minimum number of shareholders for Limited Company | 1 |
| Time frame for the incorporation | The application for company formation in Australia with the Business Registration Service can be completed in 15 minutes. The incorporation can take up to 2 days. |
| Corporate tax rate in Australia | Standard rate is 30%. A lower corporate tax rate, of 25%, is available for legal entities that qualify as “small and medium sized companies”. |
| Dividend tax rate | The tax rate varies between 0% to 30% |
| VAT Rate | 10% |
| Are Shelf Companies Available? | Yes |
| Do you supply a Registered Address/Virtual Office? | Yes |
| Local Director Required | When opening a company in Australia it is necessary to have at least 1 director who is an Australian resident |
| Number of double taxation treaties (approx.) | Approximately 45 |
| Redomiciliation Permitted | Yes |
| Electronic Signature | Yes |
| Is Accounting/Annual Return Required? | Yes |
| Foreign-Ownership Allowed | Yes, with certain limitations in specific industries. |
| Any tax exemptions available? | Yes (capital gains tax exemption, tax exemptions available for foreign investors). |
| Tax incentives | Inward investment incentives, capital incentives, incentives for reasearch and development, cash grants, etc. |
Can one register a representative office in Australia?
Yes, one can set up a company in Australia as a representative office. However, it is important to be aware of the fact that the representative office can’t be used for the purpose of developing commercial activities. In other words, the unit is not allowed to obtain a profit from its operations, but this doesn’t mean that it will be considered a non-profit entity. These two represent very different entities, and our consultants in company formation in Australia can offer more information on the main characteristics.
The representative office has the main purpose of developing marketing research or establishing business partnerships with partners in Australia, in order to help the foreign company abroad to gain more knowledge on the local business environment and the characteristics of the Australian consumer market, prior to actually starting a company here set up for commercial purposes.
However, the representative office is registered following the standard process of company formation in Australia that is required for this structure. In the list below, our consultants in company registration in Australia have prepared a short presentation on few highlights regarding the representative office:
- the office needs to have a registered office, just like in the case of all other business structures;
- the foreign company must appoint a local representative, who has to be an Australian resident;
- the local resident can act as the director of the unit, as it is required to have at least one director;
- the representative office will have as a shareholder the parent company abroad;
- it can be set up only by corporate shareholders, individual shareholders who have the quality of natural persons are not allowed to incorporate the representative office;
- although the director has to be an Australian resident, the foreign company can hire expatriate workforce to work as a part of the representative office’s team;
- please mind that if you will want to hire foreign workforce, the employee must have a work permit in Australia, and that its issuance takes approximately six months.
How can I open a proprietary company in Australia?
If you want to open a LLC in Australia you must know that this legal entity can be can be limited (Pty Ltd) or unlimited (Pty) and it can be incorporated by at least one member and a maximum of 50 shareholders, as mentioned by the provisions of the Corporations Act 2001. These structures can be classified as small and large, depending on the assets involved, the number of employees and the revenues registered at the end of the year.
If you want to open a company in Australia as an LLC, then it will be necessary to establish a trading name for the newly founded legal entity. The company’s selected name must be unique on the Australian territory.
This implies that the Australian registration representatives will first need to approve the name under which the business will be registered. The company name must also include the legal entity of the company.
When you will set up a company in Australia as an LLC, you must also prepare and sign the articles of association (or the bylaws). In this document, the main functioning rules of the company must be stated.
It also includes details about the company’s shareholders, their ownership rights, the main objects of activity of the company and other compulsory provisions stated by the Corporations Act.
How can I register a company in Australia?
The incorporation of a company in Australia starts with the requirements of the Australian Business Register (ABR) overseen by the Australian Securities and Investments Commission which offers a simplified procedure in this matter by having a close connection with other local authorities. First, it is required to do a name verification, in order to see if the company name that you are interested can be used.
The Australian company can start its business activities in Australia once it receives the Australian Business Number (ABN), which is issued by the personnel of the Australian Business Registration Service. Our team of advisors can guide foreign investors throughout the incorporation process of a company in Australia and can help them in submitting the necessary documents which are known as the company’s constitution.
The characteristics of the Australian LLC
If you want to set up a company in Australia as an LLC (the proprietary company), you should know the main rights this company type has. Our team of specialists in company incorporation in Australia have prepared a short list regarding this matter:
- this company type is entitled to develop commercial activities in Australia;
- it is also entitled to sign contracts with local clients;
- it can enter import-export activities, as it is allowed to import various goods into Australia, including raw materials, as well as to export goods;
- the company can operate with a single director appointed by the shareholders;
- one can open a company in Australia as an LLC as a natural person or a corporate entity;
- the legal entity needs at least one shareholder, regardless of its type, for its incorporation;
- the shareholder is allowed to hire workforce from other countries.
What is the process of registering a branch office in Australia?
Setting up a branch office is one of the options that are available for foreign companies expanding on this market. The branch office is a structure that does not have a legal personality and it is a suitable vehicle for companies that want to implement the same business model in all the countries where it carries business operations.
Also, the business operations of the branch office in Australia have to be the same as the ones of the parent company. In order to set up the branch office, the foreign investors will have to start the process of company formation in Australia, which is basically the same with the one available for other company types, but which has its own particularities. In the list below, our team of consultants in company registration in Australia has prepared a short presentation on the main aspects you should know on a branch office:
- the parent company has to provide its certificate of incorporation from the country of origin;
- the branch office will be treated as non-Australian entity, that is registered under an Australian Registered Body Number;
- the branch will be considered completely dependent to its parent company, which holds full responsibility for the debts of the branch;
- the branch must also have a registered address in Australia, a requirement for all legal entities;
- from a taxation point of view, the branch will be liable to paying taxes in Australia only for the income obtained from activities developed here;
- the branch will also be liable to the payment of the GST, which is an equivalent of the VAT.
Can I establish a branch or a subsidiary in Australia?
Yes, companies from abroad can set up Australian branches and subsidiaries to carry out the operations from the country of origins. A copy of the certificate of incorporation of the foreign company, a copy of the constitution, the list of managers of the branch or subsidiary, and a memorandum stating the directors’ liabilities and rights in the company are among the necessary documents for establishing a branch or a subsidiary. If you would like to start a business in Australia, we invite you to talk to our advisors.
What are the characteristics of a subsidiary in Australia?
Another option for foreign companies is to open a company in Australia that will be considered a subsidiary. The subsidiary is simply a locally incorporated company, under one of the legal entities recognized in Australia, which is part of the same group of entities belonging to the parent company, but which benefits from independence from the parent company.
This means that the subsidiary is entitled to develop its own business strategies, without the full approval of the parent company. However, the role of the parent company in the subsidiary’s business plans is still taken into consideration, as the parent company is the founder of the subsidiary. The liability of the parent company will be limited to the number of shares owned in the company.
In the process of company formation in Australia, the subsidiary will be registered as an Australian tax resident entity that is allocated with an Australian Company Number. Although the company is set up by a foreign entity, the management structure of the company must include a director who is an Australian resident.
The subsidiary, just like the branch, must have a local business address, registered with the local institutions. However, from a tax point of view, there are important differences, which can be detailed by our team of consultants. When establishing a subsidiary, please mind that in most of the cases, the company will take the form of a proprietary company limited by shares or a of a public company limited by shares.
Depending on the selected type, various obligations can appear, for instance, regarding the number of directors that have to be appointed (and which are prescribed under the national company law); however, in most of the cases, the investors who start the process of company formation in Australia for a subsidiary will prefer to register a proprietary company limited by shares, which is the most popular business form for local investors as well.
What are the reporting requirements in Australia?
Companies in Australia are legally required to submit financial documents and to report on their financial activity and situation as per the regulations of the accounting procedures. All companies in Australia have certain reporting obligations to comply to, but this will vary based on the company type.
In the case of branch offices and subsidiaries, they both are required to submit their annual returns with the local authorities and in the case of a branch, the parent company will also have reporting obligations in Australia for its own corporate papers, such as the balance sheet.
Further on, the accounting procedures in Australia impose an audit on certain companies. The branch office is not required to conduct an audit, but the subsidiary is. This applies in the case of subsidiaries which are controlled by foreign companies. For branches, although the audit is not required, the Australian financial authorities can request an audit on the financial reports, if the submitted documents do not provide sufficient clarity.
Purchase a shelf company in Australia
If foreigners do not want to set up a company from scratch, they have the possibility of buying a shelf company or a ready-made company in Australia that is already registered on the market. This type of company has no business activities, is kept on a shelf and it is ready to be transferred to the entrepreneurs in Australia.
The shelf company in Australia is the ideal way to start a business here in the case of those who want to rapidly set up their operations on the local market. The shelf company benefits from most of the characteristics of a regular legal entity.
The main advantage is that the local or foreigner investors do not have to go through the entire company incorporation process.
Why should businessmen invest in Australia?
Australia provides numerous reasons for deciding to invest here. Each economy of the world has its own particularities, and so does Australia, which is a major economy with regards to gold exploitation. It has one of the most productive and competitive mining sectors at a global level, amongst other important business fields. Below, we will present some of the reasons that should be of interest for those who want to start the process of company formation in Australia:
- in 2017, Australia was the world’s 2nd largest gold producer, accounting for 10% of the entire yearly production;
- energy – the country stands out as a leader in wind power, accounting for 33%, compared to the global average, which stands at 23%;
- the International Monetary Fund (IMF) estimated that, by 2023, the country will outperform all other countries that are in the same development category as Australia (it is also important to know that by 2017-2018, it had 28 years of consecutive economic growth);
- in 2018, it ranked as the 5th economy for economic freedom and the 18th for the ease of doing business (out of a total of 190 jurisdictions);
- according to the Department of Foreign Affairs and Trade, it is also one of the states with the highest number of tertiary education graduates – the 7th country with a group of persons of 25-65 years old who graduated from university.
Company formation services in Australia
Our team of company incorporation agents in Australia is at your disposal if you decide for business formation in this country. With a wide experience in this matter, our advisors can help you with the registration and can offer tax advice and compliance, business management, support for obtaining the necessary licenses and permits, employment matters and many more.
In case you need legal assistance for moving to Australia, we can put you in contact with our partners. We invite you to send your questions to our consultants if you are interested in the process of opening a company in Australia.