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Doing Business in Australia

Rated one of the wealthiest in the world, Australia provides a stable, easy, low-risk environment to invest and do business.

Australia is a developed economy that gives a range of investment opportunities across different industries. In addition to being strategically located in the Asia-Pacific region, which is a growing and dynamic market, the country has a thriving economy with an abundance of natural resources.

Australia is rated one of the easiest places in the world for starting a business. It also has one of the strongest, and most competitive economies in the world and is the dominating financial center in the Asia Pacific region.

Few hurdles to entry, an assortment of legal and corporate frameworks, and an excellent business culture make this country attractive to businesses looking to expand. The region has also achieved a “Triple A” credit rating from top credit bureaus, which positions it as a low-risk economy. 

Generally, Australia offers a favorable business environment for foreign investors, with a range of benefits that make it an attractive location for doing business and investing.

Advantages of doing business in Australia

Australia is a developed and stable economy that offers a range of advantages for businesses looking to establish or expand their operations. Here are some of the key advantages of doing business in Australia: 

    • Australia has a strong and stable economy with a high GDP per capita, low inflation, and low unemployment rates. The country is also ranked highly for ease of doing business by the World Bank. 
    • Australia has a highly skilled and educated workforce, with a strong focus on innovation and technology. The country also has a high standard of living, which makes it an attractive destination for skilled workers. 
    • Australia has a modern and efficient infrastructure, with well-developed transport, telecommunications, and energy networks. This makes it easy for businesses to connect with customers and suppliers across the country and beyond. 
    • The Australian government has implemented a range of policies to support business growth and innovation, including tax incentives, grants, and funding programs. The government also offers assistance to businesses looking to expand into international markets. 
    • Australia’s economy is stable, with a strong rule of law, transparent regulations, and a low level of corruption. The country has a well-established financial system and is home to some of the world’s largest banks and financial institutions. 
    • Australia’s economy is diversified across a range of industries. This provides investors with a range of opportunities to invest in different sectors. 
    • Australia has a stable political environment, with a robust democracy and a tradition of peaceful transfers of power. The government also offers assistance to businesses looking to expand into international markets.
LEGAL SYSTEM

Australia has a well-developed legal system that provides a stable and predictable business environment. The legal system in Australia is based on a common law system, which is similar to the legal systems in the United Kingdom, and New Zealand, with the High Court of Australia as the ultimate appellate court. 

Some key features of the Australian legal system include The Australian Constitution which sets out the framework for the federal government and the powers it has, the Federal and state laws, The court system, The common law, and the Separation of powers. 

In addition, the Australian legal system provides strong protection for intellectual property, including trademarks, patents, and copyrights. 

Foreign Investment 

Being a popular destination for foreign investment, with a range of opportunities across a variety of industries, Australia is generally welcoming of foreign direct investment (FDI) and has a well-established framework for foreign investment. The Australian government actively promotes foreign investment and offers a range of incentives to attract investors. 

Foreign investment is regulated by the Foreign Investment Review Board (FIRB), which assesses proposed investments against a range of criteria to ensure they are in the national interest. FIRB approval is required for certain types of investments, such as investments in sensitive industries or those over a certain value threshold. 

Foreign investment is highly encouraged, but authorization is mandated for specific types of investments, depending on, among other things, the type of investor, type of Investment of other foreign investors, industry sector, value of the proposed investment, nature of the proposal, and additional National Security Review. 

Legal Forms in Australia 

In Australia, there are several different business structures that entrepreneurs can choose from depending on their needs, goals, and preferences. The most common business structures in Australia are: 

Sole trader 

This is an Australian business owned and operated by a single person. 

Features 

  • It is the simplest and most common type of business structure in Australia. 
  • It’s the owner is responsible for all aspects of the business, including debts and legal issues 
  • Its owner reports business income and expenses on their tax return 
  • It’s easy to set up and operate. 

Partnership 

A partnership is a business owned and operated by two or more people who share profits and losses. 

Features 

  • Partnerships can either be general or limited. 
  • Each partner is personally responsible for the debts and legal issues of the business 
  • Partners report their share of the partnership income on their tax return 
  • The partnership should outline the roles, responsibilities, and decision-making process of each partner. 

Company 

This is a separate legal entity from its owners (shareholders). Companies can be either proprietary companies (Pty Ltd) or public companies (Ltd). 

Features 

  • It’s a separate legal entity from its owners (shareholders) 
  • The shareholders have limited liability, so their assets are protected in case of legal issues. 
  • It must be registered with the Australian Securities and Investments Commission (ASIC) 
  • Directors manage the day-to-day operations of the company and are responsible for complying with legal obligations 

Trust 

This refers to a legal arrangement in which an individual (trustee) holds and oversees assets for the benefit of others (beneficiaries). 

Features 

  • There are many types of trusts, including family trusts and discretionary trusts 
  • It’s beneficiaries receive income and/or capital distributions from the trust 
  • The trustee is responsible for complying with legal obligations and managing the trust’s assets. 

Co-operative 

A co-operative is a business owned and operated by its members, who share profits and have equal voting rights. 

Features 

  • Co-operatives can be registered as a company, a cooperative, or an unincorporated body 
  • Its members receive dividends based on their level of involvement in the business 
  • Its members have a say in the management of the cooperative through voting rights. 

Branch office 

This is a type of business structure in which a foreign company sets up a separate legal entity in a foreign country to conduct business. 

Features 

  • A branch office is not a separate legal entity from the parent company. 
  • It must be registered with the Australian Securities and Investments Commission (ASIC) and must comply with the Australian Corporations Act. 
  • It must use the same name as the parent company, with the addition of “Australia” at the end. 
  • It must have at least one director who is a resident of Australia. 
  • Reporting: The branch office is required to submit financial reports to ASIC and the ATO on an annual basis. 

When choosing a business structure in Australia, it is important to consider factors such as taxation, liability, control, and ongoing costs. So it’s recommended to seek professional advice to determine the most suitable business structure for your specific needs. To establish your company in Australia, contact your Damalion expert now.

BANKING

Australia has a sophisticated and well-developed banking system that is made up of a mixture of domestic banks, international banks, credit unions, and building societies. And is regulated by the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA). 

Some key features of banking in Australia include: 

Major banks 

Australia’s banking system is dominated by four major banks which account for a significant portion of the banking industry’s assets, deposits, and profits. And while the four major banks dominate the industry, there are many smaller banks, credit unions, and building societies that provide competition and choice for consumers. 

Banking products and services in Australia 

Australian banks offer a wide range of banking products and services, including savings accounts, term deposits, credit cards, personal loans, home loans, and business loans. Banks also offer a range of digital banking options, including online banking, mobile banking, and digital wallets. 

Regulation and consumer protection 

The Australian banking system is prone to a big regulatory framework that is built to guarantee the safety and stability. Banks are required to comply with a range of consumer protection laws, including the Australian Consumer Law and the Banking Code of Practice. 

Opening a bank account in Australia 

If you’re planning on moving to Australia either for the lifestyle or business, one of the first things you’ll need is a bank account to get your finances in order. 

When opening an account, the most important requirements are valid documents, and when it comes to documentation for a bank account, Australian banks use a points system. There’s an allotted list of documents, and each is allocated a set number of points. To open an Australian bank account, the applicant must present several documents that add up to 100 points. This is the Australian government-adopted identification system, built to combat fraud. 

In many cases, applicants will only need to provide just one primary photographic ID document (this can be substituted with one form of primary non-photographic ID document) plus, one secondary ID document such as a Recent utility bill, Paper driving license, or a Notice from the Australian Taxation office. 

Once the point system is met, the rest of the process will be very straightforward. 

In addition, applicants can begin the process of opening an Australian bank account online, although it depends on the bank. 

To save yourself a couple of stress, just contact your Damalion experts now and let us help.

IMMIGRATION

Life in Australia is unique. Australia is a remarkable country with a diverse culture, relaxed lifestyle, and natural wonders. 

If you plan on moving to Australia, there are specific steps to take. You must obtain residency and immigrate to Australia formally. 

Type of Australian Residency 

There are several ways to obtain Australian residency, including: 

  • Skilled migration: this requires an individual to meet certain eligibility criteria, including age, work experience, and education qualifications. Applicants must also meet the points threshold in the skilled migration points test. 
  • Family migration: this is for individuals who have a partner, spouse, or family member who is an Australian citizen or permanent resident. This includes partners, children, parents, and some other relatives. 
  • Business migration: this is an option for individuals who want to establish or invest in a business in Australia. This includes the Business Innovation and Investment program, which provides options for entrepreneurs, investors, and business owners. 
  • Humanitarian and Refugee programs: these is for people who are fleeing persecution or conflict in their home countries. 

Other special programs include the Global Talent Visa Program, which provides a streamlined pathway for highly skilled individuals in certain industries to obtain Australian residency. 

Australian permanent residency 

Australian permanent residency is approved for certain visa holders in Australia. Australia offers a few immigration programs such as business stream, family stream, special eligibility stream, work stream, and child stream permanent visas. 

For foreigners looking to obtain an Australian residency, it’s recommended to seek professional advice and guidance to assist you in the application process. Contact your Damalion experts now and let us help.

TAX REGIME

The Australian tax system is relatively straightforward and business-friendly, with a single national tax agency, the Australian Taxation Office (ATO), administering all federal taxes. 

Tax residency 

The Federal Government of Australia has jurisdiction to tax residents on their worldwide income and non-residents on only Australian-sourced income. 

Australian legislation comprises certain rules about residency to specify whether an individual or corporation is a resident for tax purposes and to tax accordingly. 

Main types of taxes in Australia: 

Income tax 

Income tax is a tax on the income of individuals, businesses, and other entities. Income taxes are the most important form of taxation in Australia and are collected by the federal government through the ATO. The tax rate is progressive, meaning that people with higher incomes pay a higher rate of tax. 

Corporate taxes 

Corporate tax is paid by companies and businesses on their net profit, but the company’s loss is carried ahead to the next financial year. Australian corporate tax is levied at a flat rate of 30% (25% for small businesses). Corporate tax is paid on the firm’s profit at the corporate rate and is commonly available for distribution, in addition to any conserved earnings it may have carried forward. 

Goods and Services Tax (GST) 

This is a tax on the supply of most goods and services in Australia. The current rate of GST in Australia is 10%. Businesses registered for GST must collect the tax on behalf of the government and remit it to the ATO. 

Capital gains tax (CGT) 

CGT is a tax on the profit made from the sale of an asset, such as property or shares. The tax is only payable on the gain, not the entire sale price. There are several exemptions and concessions available to reduce the amount of CGT payable. 

Fringe benefits tax (FBT) 

FBT is a tax on non-cash benefits provided to employees, such as company cars, health insurance, and entertainment. Employers are responsible for paying FBT on behalf of their employees. 

Superannuation 

Superannuation is a type of tax on income that is paid into a retirement savings account. Employers are required to contribute a percentage of their employee’s income into a superannuation account. 

Excise tax 

An excise tax is a tax on certain goods, such as fuel, alcohol, and tobacco. The tax is included in the price of the goods and is paid by the manufacturer or importer of the goods. 

Property taxes 

There are several property taxes in Australia, including stamp duty on the purchase of property, land tax on investment properties, and council rates on all properties. 

Tax treaties 

Australia has signed tax treaties with several countries, including Argentina, Indonesia, Philippines, Aruba, Ireland, Poland, Austria, Isle of Man, Romania, Belgium, Israel, Russia, British Virgin Islands, Italy, Samoa, Canada, Japan, Singapore, Chile, Jersey, Slovakia, China, Kiribati, South Africa, Cook Islands, Korea, Spain, Czech Republic, Malaysia, Sri Lanka, Denmark, Malta, Sweden, Fiji, Marshall Islands, Switzerland, Finland, Mauritius Taiwan, France, Mexico, Thailand, Germany, Netherlands, Turkey, Guernsey, New Zealand, United Kingdom, Hungary, Norway, United States, India, Papua New Guinea, and Vietnam 

These treaties are designed to prevent double taxation, promote international trade and investment, and provide greater certainty for taxpayers. 

Some key features of these tax treaties in Australia include Double taxation avoidance, Exchange of information, and Anti-avoidance measures. 

Note that the tax system in Australia is complex, so it is important to seek professional advice to ensure compliance with all tax obligations.

INTELLECTUAL PROPERTY

Intellectual property (IP) refers to creations of the mind and can be anything from a name, creation, or idea. In Australia, IP is protected by a range of laws and regulations, and it extends to a wide variety of areas, including trademarks, patents, copyrights designs, and plant breeders’ rights. 

In Australia, several types of intellectual property rights are recognized and protected under the law. Here are the main types: 

Patents 

  • Patents are granted to protect inventions, such as new products or processes. 
  • To be granted a patent in Australia, an invention must be new, involve an inventive step, and be capable of industrial application. 
  • A patent gives the owner the exclusive right to make, use, and sell the invention for a set period. The length of protection will depend on the type of patent. 

Trademarks 

  • Trademarks are used to distinguish the goods or services of one trader from those of another. 
  • A trademark can be a word, phrase, logo, or combination of these. 
  • In Australia, trademarks can be registered with IP Australia, the government agency responsible for administering IP rights. 
  • A trademark gives the owner the exclusive right to use the mark about the goods or services for which it is registered. 
  • A trademark is registered with IP Australia for 10 years and is renewable indefinitely. 

Copyright 

  • Copyright protects original creative works, such as literature, music, art, and computer programs. 
  • Copyright protection arises automatically when the work is created and gives the owner exclusive rights to reproduce, publish, and communicate the work to the public. 
  • The term copyright protection varies depending on the type of work. 

Designs 

  • Designs protect the appearance of a product, such as its shape, pattern, or configuration. 
  • To be registered as a design in Australia, a design must be new and distinctive. 
  • A design registration gives the owner the exclusive right to use, license, or sell the design for a set period of time. 
  • A registered design gives the owner exclusive rights to use, license, or sell the design for a period of 5 years, renewable for up to 15 years in total. 

Plant Breeder’s Rights 

  • Plant Breeder’s Rights (PBR) protect new plant varieties that are distinct, uniform, and stable. 
  • Plant breeder’s rights in Australia are protected under the Plant Breeder’s Rights Act 1994. 
  • PBR gives the owner exclusive rights to produce, sell, and license the variety for a period of 20 years for most plant species, or 25 years for vines and trees. 

Trade Secrets 

  • Trade secrets refer to confidential business information, such as customer lists and pricing strategies, that gives a business a competitive advantage. 
  • Trade secrets in Australia are protected under common law and contract law, rather than through registration. 

The intellectual property system in Australia provides a framework for protecting a wide range of creative and innovative works. So it’s important for individuals and businesses to understand their IP rights and seek professional advice if needed to ensure their IP is properly protected.

LABOR AND EMPLOYMENT

Australia has a comprehensive system of employment law, which is enforced by the Fair Work Ombudsman. 

In Australia, labor and employment are regulated by a combination of federal and state laws, which are generally designed to protect the rights of employees and ensure that workplaces are safe, fair, and equitable. 

Employment contracts 

Employment contracts set out the terms and conditions of employment, including the nature of the work, hours of work, pay, and benefits, and notice periods. In Australia, contracts can be written or oral, but written contracts are more common. 

In Australia, there are several types of employment contracts that are commonly used. These include: 

  • Permanent Employment Contract: this is the most common type of employment contract in Australia, where an employee is hired for an ongoing, indefinite period of time. 
  • Fixed-Term Employment Contract: this is a contract where an employee is hired for a specific period of time, with a fixed end date. 
  • Casual Employment Contract: this is a contract where an employee is engaged on an as-needed basis, without any guarantee of ongoing work. Casual employees do not have access to certain entitlements such as paid leave and notice of termination, but they typically receive a higher hourly rate of pay to compensate. 
  • Part-Time Employment Contract: this is a contract where an employee works less than full-time hours, usually on a regular basis. Part-time employees are entitled to the same entitlements as full-time employees on a pro-rata basis. 
  • Independent Contractor Agreement: this is a contract where an individual is engaged to perform work for a business as a self-employed contractor. Independent contractors are responsible for their tax and superannuation and are not entitled to certain entitlements such as paid leave. 

Employment compensation, entitlements, and benefits in Australia include: 

  • Minimum wage: The Fair Work Commission sets a national minimum wage for all employees in Australia. The minimum wage is reviewed annually and takes into account factors such as inflation and the state of the economy. 
  • Working hours: the Fair Work Act states an employee’s maximum working week is 38 hours ( 7.6 hours per day) in Australia. But employers can request employees to work reasonable extra hours (overtime) which is subject to extra payment. 
  • Workplace health and safety: employers have a duty to provide a safe and healthy workplace for their employees. This includes things like providing training and equipment, conducting risk assessments, and reporting incidents and hazards. 
  • Discrimination: it is illegal in Australia to discriminate against someone on the basis of their race, gender, age, or other personal characteristics. Employers have a duty to prevent discrimination in the workplace. 
  • Paid Annual Leave: full-time and part-time employees are entitled to paid annual leave of at least four weeks per year, while casual employees receive a loading on their hourly rate of pay to compensate for the lack of paid leave entitlements. 
  • Paid Compassionate Leave: employees are entitled to paid compassionate leave to attend to a family member or household member who is suffering from a life-threatening illness or injury, or who has passed away. 
  • Paid Parental Leave: eligible employees are entitled to paid parental leave for up to 18 weeks, at the national minimum wage. 
  • Sick Leave: full-time employees are entitled to paid sick leave. Australian employees can also take paid leave to support an immediate family member who is sick or faces an emergency situation. 
  • Superannuation: employers are required to contribute a minimum of 10% of an employee’s ordinary time earnings into a superannuation fund. 
  • Workers’ Compensation: employers are required to provide workers’ compensation insurance to cover employees in the event of a work-related injury or illness. 
  • Termination and severance: employment termination must be based on fair judgment, so it is prohibited on grounds such as race, gender, age, or if the employee is absent due to illness or less than three months in a 12-month period. Employees who believe they have been unfairly dismissed can lodge a complaint with the Fair Work Commission. The Commission can order reinstatement or compensation if it finds that the dismissal was unfair. 

Additional benefits that may be negotiated between employers and employees can include things like health insurance, additional leave entitlements, and flexible working arrangements beyond what is legally required.

Are you looking to enter the Australian market?

Your Damalion experts can help. We have the expertise that allows us to guide clients in building a company, opening a bank account, and investing in Australia. We also provide business solutions, including compliance, entity management, accounting, taxation, payroll support, and many more across the country. 

Contact us now to register your company in Australia. 

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