Australia recently signed free trade agreements with both the USA and China, and as a result, interest in setting up business in Australia is rising.
With a stable government, favourable exchange rate & economic conditions, and unparalleled growth, plus time zones that bridge both US & European business days, it’s easy to see why overseas organisations want to experience our warm welcome for themselves.
Like any country though, business processes may be handled differently. So if your company is looking to set up in Australia, here are some answers to things you might need to know.
- What company structure is the best to use for my subsidiary company when setting up in Australia?
- Are there any operational requirements in running a Proprietary Limited Company?
- Are there any compliance requirements?
- What is the current tax rate for a Company in Australia?
- How much does it cost to set up a Proprietary Limited company in Australia
- What is an ABN?
- What is GST?
- What is required to open business bank account in Australia?
- Is it a legal requirement to have an employment contract in Australia?
- What is superannuation?
What company structure is the best to use for my subsidiary company when setting up in Australia?
Known as a proprietary limited company (P/L for short); an Australian company is an incorporated business, and also a distinct legal entity.
Dependent on your company’s needs, a proprietary company is usually the best option, because it has the advantage of being simpler to manage and less expensive to administer.
Are there any operational requirements in running a Proprietary Limited Company?
Yes. A proprietary company must have at least one director, but it need not have a secretary. One director and the secretary (if any), must reside in Australia, and the company must have a registered office and place of business (which can be the same address).
There are currently no minimum capital requirements for an Australian subsidiary of a foreign company.
Are there any compliance requirements?
Yes. You must lodge a Business Activity Statement (commonly known as a “BAS”) every quarter, and a tax return every year. You’ll also need to file an annual statement with ASIC (Australian Securities & Investments Commission).
The Australian financial year runs from July 1 to June 30.
What is the current tax rate for a Company in Australia?
For the current 2016/17 tax year, the government announced significant changes to the corporate tax rate. With the threshold now raised to $10million annual turnover, business under this figure will pay 27.5%, and those over will remain on 30%.
This is part of a progressive reduction to remove the threshold entirely and bring tax rate down to a standard 25% in the next 10 years.
How much does it cost to set up a Proprietary Limited company in Australia
Including statutory charges, set up costs will be under AUD$3,000.
What is an ABN?
An ABN (‘Australian Business Number’) is a unique 11 digit number that identifies your business or organisation to the government and business community.
If you are running a business you will need to use an ABN for contracts, invoices and various financial institutions.
What is GST?
The GST is a Goods and Services Tax. Currently charged at a rate of 10%, it applies to most goods and services purchased across the country.
If your business has a annual turnover of $75,000 or more, you must register for GST.
What is required to open business bank account in Australia?
To open a business bank account in Australia, you will require a certificate of incorporation, your ABN (see above) or ACN (Australian Company Number) and your directors identified according to the 100 point check adopted by Australian financial institutions.
Is it a legal requirement to have an employment contract in Australia?
All employees in Australia have a common law contract of employment (whether written or unwritten). The contract specifies terms and conditions with their employer.
This contract is subject to Australian Government, and in some instances state and territory government, legislative requirements.
An employment contract cannot provide for less than the legal minimum, set out in the National Employment Standards (NES). This covers all employees, regardless of whether they’ve signed a contract.
What is superannuation?
Superannuation is a compulsory contribution made by all employers on behalf of its eligible employees. This is paid directly to each employee’s nominated super fund, or to a default fund.
The amount paid is set at a percentage of each employee’s regular income. The Australian Government determining the “Super Guarantee” rate.
For the financial year 2015/16, the rate is set at 9.5% of regular income. This is not due to rise again until 2021.
If you have any questions about setting up your business here in Australia, get in touch with us here at Penguin Management. With over 25 years experience, we know the answers!
Updated 8th August 2016 – Changes to company tax rates.