If you are looking to operate your foreign owned business in Australia there are a few things you need to consider. Making sure that you get some of the key components right from the beginning can save you a lot of headaches and costs later on down the track. Here are some of the key things we think you need to consider before commencing your operations:
1. Choose the right business structure
Will you continue to operate as your offshore entity or will you start an Australian entity? There are considerations around tax, employment/visas and contracts with clients or suppliers. There is no hard and fast rule. So here are the pros and cons for both.
a. Operating through a non-Australian company
Even if you are an overseas company you need to register with the Australian Securities Investment Commission (ASIC). There must be a registered office in Australia and have a local agent or representative for the company.
This is a complex way of operating and you aren’t exempt from Australian taxes, you still need to comply with the Australian legislation and the tax rules. Make sure you get advice from an accountant that is Australian based to ensure that you have established your processes and practices correctly.
b. Operating an Australian entity
There are several structures that you can utilise, these include a proprietary private company limited by shared (Pty Limited), public company, partnership, discretionary or unit trust or an incorporate or unincorporated joint venture. You need to gain advice as to the best structure for you, but the most common entity is the proprietary private company limited by shares.
If you want to set up an Australian Pty Limited company this is relatively cheap and quick to do. You will need a company name and an Australian Company Number (ACN). There must be at least one company direct who resides in Australia, and they must be at least 18 years old. You can appoint additional directors that are foreign directors.
You must appoint a secretary, if you don’t then each director is liable for a breach of the responsibilities of a secretary. There must also be a public officer who is responsible for tax obligations and dealing with Australian tax authorities.
2. Opening a local office
As part of operations you will need to have an Australian office. You can do this by either leasing an office or purchasing Australian real estate. You need to consider legislation around the acquisition of real estate by foreign companies. Generally if the property value is less than $50 million it doesn’t need the approval of the Foreign Investments Review Board (FIRB).
3. Employing Australian employees
Australia has industrial relations laws that govern the requirements regarding employees. This is an area of law that changes frequently so you will need to stay up to date on the current legislation. There is a range of laws and employment standards under the Fair Work Act 2009. When it comes to pays there are award rates, superannuation and tax legislation that also varies across the various Australian states.
Implementing a payroll system that calculates these taxes appropriately is essential.
Ensure you have some good workplace policies in place to help with dealing with anti discrimination, bullying, sexual harassment, equal opportunity and internet and email usage.
Make sure you are complying with occupational health and safety legislation in the states in which you operate. Failure to do so can result in financial and criminal liability.
Every company must have a Tax File Number (TFN) from the Australian Taxation Office (ATO). You must comply with a range of obligations including corporate tax, capital gains tax, duties and excise and GST. If you have employees you will also need to manage employment tax withholding, Fringe Benefits Tax and superannuation. This is a specialised area and it is essential that you get the support and advice of a registered tax accountant.
5. Competition and Consumer Act
Australia has strict laws that govern consumer protection which governs areas such as advertising and representation of a product or service. Product liability and safety need to be considered and complied with. Australia also prohibits anti-competitive behaviour such as price fixing, exclusive dealing, third line forcing and resale price maintenance.
6. Intellectual Property Rights
There are a number of Australia-wide legislations that apply to intellectual property rights. These include Trade Marks Act 1995 (Cth), Patents Act 1990 (Cth) and the Copyright Act 1968 (Cth).
If you are considering starting an operation in Australia we are happy to offer advice and support to help you make some of these initial decisions.