Doing business in Australia? Here are six tips for success

Australia is highly attractive for investment and an ideal hub for tapping into Asian markets. Here are six tips for ensuring success and avoiding costly pitfalls when setting up business down under.

A stable political system, thriving tech sector and abundant natural resources, along with a high standard of living, make Australia an attractive place to invest.

Its fintech industry ranks sixth in the world and second in the Asia-Pacific region. This has helped the country to grow as a hub for tech investment in critical areas such as finance, regulation, medicine and education.

Australia is also ideally positioned for tapping into Asia, the new centre of global economic growth. It already acts as a hub for many multinational companies in the region.

A regional, comprehensive free trade agreement between Australia, New Zealand and Southeast Asian countries is from 1 January 2022 gradually phasing out all barriers to trade in goods, services and investment.

1. Select the right structure for your business in Australia

Investors who want to start a business in Australia can usually choose between incorporating a new enterprise as a corporate entity or opening a branch office.

The most common business structure for international investors is the proprietary private company limited by shares (Pty Limited).

A Pty Limited company can be set up in one or two business days at a relatively low cost, as there is no minimum share capital requirement.

The company, which must register with the Australian Securities and Investments Commission (ASIC), must appoint at least one director who is resident in Australia. Foreign directors can be appointed as long as there is at least one local director.

2. Comply with Australia’s foreign branch office legislation

Even though a branch office is not a separate legal entity from its foreign parent, it must comply with Australian legislation. A branch office is subject to tax on Australian-sourced income only.

The branch office must be registered with the ASIC and provide certified copies of the parent company’s incorporation documents. It must also maintain a physical office staffed by the company’s legal representative.

Australian and foreign investors who plan to do business in certain sectors – banking, consumer credit and media – must obtain licences, such as the Australian financial services licence (AFSL) or the Australian credit licence (ACL).

3. Understand the social security system in Australia

Australian residents pay a 2% levy on their taxable income to fund the national health scheme, Medicare.

Foreign nationals who are temporary residents and those with taxable income below the relevant low-income threshold are generally exempt from this.

High-income taxpayers without private health insurance are required to pay an additional 1-1.5% surcharge.

Employers must contribute to a retirement savings fund for their employees. This is in addition to the means-tested federal government Age Pension.

Employers must also pay a fringe benefits tax (FBT) on non-cash benefits offered to employees or their families. The current rate is 47% and the tax applies to both Australian and foreign nationals.

4. Make the most of incentives for your business in Australia

Australia has tax treaties with more than 40 countries. The government plans 10 new or updated treaties by 2023.

It also offers a range of tax credits and investment incentives, including:

• research and development (R&D) tax credits for activities carried out in Australia
• export market development grants
• venture capital investment incentives
• deductions for capital expenditure on oil and mineral exploration and production

The corporate tax rate is 30%, except for small or medium-sized enterprises with annual turnover below AUD50m, which pay 25%.

5. Understand taxation and employment law in Australia

Australian residents pay income tax at progressive rates ranging from 0% for incomes below AUD18,200 to 45% for incomes above AUD180,000.

Owners of Australian real estate and land pay an annual land tax, which varies from state to state. Owner-occupied main residences are exempt from land tax.

The Fair Work Act 2009 provides a safety net of minimum entitlements, such as a national minimum wage.

It also guarantees employment standards, including flexible working arrangements, protection from unfair dismissal, and provisions to ensure employees are treated fairly and protected from discrimination.

6. Understand visa requirements for businesses in Australia

When Australian workers are not available, employers can sponsor skilled employees from abroad under a Temporary Skill Shortage (TSS) visa.

The short-term TSS visa allows employers to use temporary overseas skilled employees for a maximum of two years, or four years if an international trade agreement applies.

The medium-term TSS visa applies to highly skilled overseas employees, who can stay for up to four years and can choose to apply for permanent residence after three.

How Intertrust Group can help you invest in Australia

Before entering the Australian market, foreign investors should consider professional advice to navigate these complex matters. Working with a trusted partner is essential.

Our 4,000 professionals work together across 30 jurisdictions to offer undisputed global reach, deep local knowledge and an extensive international network to help clients achieve their strategic goals.

In Australia, we offer comprehensive solutions for corporate clients and private fund services, and support for high-net-worth individuals and their families.

Our team includes experts specialising in administration and fiduciary services dedicated to servicing multinational, private equity and fund clients.

We can help corporate clients looking to expand into this exciting economy with a full suite of services from our office in Sydney.

Why Intertrust Group?

• Intertrust Group provides a wide range of financial, fiduciary and administrative services to clients operating and investing in the international business environment.
• We are a publicly listed company with 70 years’ experience providing world-class trust and corporate services to clients around the world.
• We help companies to expand globally, offering support with restructuring, outsourcing and further developments.
• We are experts in management and administration services to operational companies and holding structures across the globe.