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Doing Business in Australia Has Been Prepared for the DOING BUSINESS Use of Businesses Exploring the Opportunities of Establishing a Presence in Australia

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Doing Business in Australia Has Been Prepared for the DOING BUSINESS Use of Businesses Exploring the Opportunities of Establishing a Presence in Australia ABSTRACT Doing Business in Australia has been prepared for the DOING BUSINESS use of businesses exploring the opportunities of establishing a presence in Australia. Given the ever-changing business landscape this document has been prepared as a guide and we IN AUSTRALIA recommend professional advice should be sought. Table of Contents Table of Contents ................................................................................................................................ 0 Introduction .......................................................................................................................................... 2 Business structures ............................................................................................................................. 5 Tax Implications of Structures ......................................................................................................... 7 Sole Trader/ Sole Proprietorship ..................................................................................................... 7 Partnership ....................................................................................................................................... 7 Company .......................................................................................................................................... 8 Trust ................................................................................................................................................. 8 Accounting, Reporting and Audit requirements ................................................................................. 1 0 Accounting ..................................................................................................................................... 10 Reporting and audit ........................................................................................................................ 10 Company Tax and other Tax law ...................................................................................................... 11 Income Tax .................................................................................................................................... 11 Capital Gains Tax .......................................................................................................................... 11 Fringe Benefits Tax ........................................................................................................................ 11 Goods and Services Tax................................................................................................................ 12 Withholding Tax ............................................................................................................................. 12 Thin Capitalisation ......................................................................................................................... 12 Transfer Pricing – OECD Model .................................................................................................... 12 Other Taxes ................................................................................................................................... 12 Employment law ................................................................................................................................ 13 Employment Conditions ................................................................................................................. 13 Occupational Health and Safety System ....................................................................................... 13 Superannuation .............................................................................................................................. 13 inaa doing business in australia article_r350164 Introduction In an uncertain world, Australia is a safe, secure and desirable place in which to do business. It has an established legal system, robust economy, stable political environment and the availability of a highly educated, multicultural and multilingual workforce. Geographically located within the Asia -Pacific region and with time zones spanning the close of business in the United States to the opening in Europe, it’s a prime location for doing business globally. Ranked 5th in the world for its economic freedom, Australia’s efficient business environment makes it one of the easiest places in the world to do business, ranking 14th out of 190 economies. It takes around 2.5 days and a minimum of three procedures to start a business. The country also ranks particularly well for enforcing contracts (3rd globally) and obtaining credit (6th). Australia is the world’s 13th largest economy and has an AAA rating from three global agencies, has experienced 27 years of consecutive annual economic growth and is the only developed economy in the world to achieve this distinction. Australia has a diverse economy with sectors ranging from export of minerals and raw materials to financial services, infrastructure, information and communication technology and biotechnology. *images sourced from Austrade.gov.au inaa doing business in australia article_r350164 inaa doing business in australia article_r350164 inaa doing business in australia article_r350164 Business structures The selection of the right business structure is essential in establishing a solid foundation as each structure has its own regulatory and tax considerations which affect the business and its owners. There are a range of business structure options for conducting business in Australia and these are outlined below. Business Key Features Regulations Structure Sole Trader • Not a separate legal entity – the owner and the business are one • Simplest business structure therefore minimal start- up costs • Owner is personally liable for all business debts Companies Proprietary Companies • Regulated by the Australian Securities • At least 1 shareholder but no more than 50 non- and Investment employee shareholders Commission (ASIC) • Must have at least 1 director who is ordinarily under the resident in Australia Corporations Act • Can have, but not required, a Company Secretary • In some cases, disclosure to investors • Must have a Public Officer for tax purposes may be required for • Must have a registered office in Australia capital raising purposes • Managed by its directors • Shareholders’ rights in relation to the company are governed by the constitution. A shareholders’ agreement would govern the relationship between the shareholders • Cannot engage in any activity that would require the lodgement of a prospectus (except for an offer of shares to existing shareholders or employees) • Provides limited liability for its shareholders, so that upon winding up of the company a member’s exposure is limited to the paid and unpaid amount on their shares. inaa doing business in australia article_r350164 Business Key Features Regulations Structure Public companies • Are used for large public ventures • Must have at least 1 shareholder • Must have at least 3 directors (2 of whom are ordinarily residents in Australia) • Must have at least 1 company secretary who is ordinarily a resident in Australia • Must have a public officer for tax purposes • Must have a registered office in Australia • Managed by its directors • Shareholders’ rights in relation to the company are governed by the constitution. A shareholders’ agreement would govern the relationship between the shareholders • May, but need not, be listed on the Australian Stock Exchange (ASX) • Subject to securities and other applicable laws, may issue a prospectus for the offer of shares, debentures or other securities Joint • A joint venture creates a common enterprise for • Regulation can Ventures parties to assist each other with a common goal or depend on the type of project joint venture vehicle (e.g. a trust or • Investors’ rights are governed by a joint venture company) agreement, a unitholders’ agreement (where the joint venture vehicle is a trust) or a shareholders’ agreement (where the joint venture vehicle is a company) • Can be used in conjunction with trust or company structures • Enables co-operation with other market participants – e.g. ability to access other market participants’ resources Partnerships • Not a separate legal entity – the partners are jointly • Partnership Acts of and severally liable for the debts of the business the States and Territories • Subject to certain exceptions, there cannot be more than 20 partners • Partnership deed inaa doing business in australia article_r350164 Business Key Features Regulations Structure • Shared control and management of the business by • Common law the partners • A partnership deed would govern and regulate the relationship between partners Trust • A trustee owns the assets of the business and • carries on the business for the benefit of the beneficiaries of the trust • The trustee may be an individual or a corporation • A formal trust deed is required to set up a trust – this document outlines how the trust is to be governed Registering • A foreign company can carry on a business in • Regulated by ASIC a foreign Australia if it completes the forms, appoints a local under the company agent and lodges and pays the prescribed fees. Corporations Act (Branch) • A registered office needs to be established in Australia • A local agent must be appointed, maybe an individual or organisation. Tax Implications of Structures Sole Trader/ Sole Proprietorship The business income is treated as the individual’s
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