Australia consistently ranks as one of the most competitive countries in the world, with the IMD World Competitiveness Yearbook highlighting its resilience. More importantly, Australia has successfully integrated with several of the most important Asian countries. Thus, Australia offers a great investment opportunity for entrepreneurs through the access it provides to the Asia-Pacific region.
Why form a company in Australia?
Australia is the perfect example of consistent strong economic growth, boasting an adjusted GDP per capita of US$39,721 – higher than Germany, the UK, France and Japan. Australia benefits greatly from a highly developed financial sector that provides stability through its well regulated banking system. This perfect storm of competitiveness, location and stability has made Australia a highly sought jurisdiction for foreign direct investment.
How do you set up a company in Australia?
The first step to company registration in Australia is to choose between a public company and a proprietary Limited company, the two most popular Public companies require a minimum of 3 appointed directors, and at least 2 of the directors must be Australia residents, in addition to a company secretary residing in Australia. Proprietary Limited (Pty Ltd) companies only need one director and member, though the director still needs to be an Australia resident.
The next step is to contact the Australian Securities and Investments Commission (ASIC) to confirm that your desired company name is available and, if so, to reserve it. Company name reservations last for two months, so company formation should be completed within that time frame.
The final step is to register with all of the authorities required by the Australian Corporations act. Companies must register for an Australian Business Number (ABN), which is used to identify your company in any business transactions and on invoices. Companies must also be registered with the ASIC. Finally, the company must register for Goods and Services Tax (GST), assuming the company meets the GST turnover limit of $75,000 or more.
What tax considerations should be made?
There are three major tax considerations that need to be made.
- The first is the Tax File Number (TFN), a unique reference number given by the Tax Office that quotes the tax office when the company applies for an ABN or when they first file tax returns. The TFN is not mandatory, but it makes the entire tax monitoring process significantly easier.
- The second is the pay-roll tax, a State tax placed on the wages paid out to employees. As this rate directly affects employers, and the rate and exemption limits differ between states, entrepreneurs should find a suitable tax professional for advice on how best to manage this tax.
- Finally is the pay-as-you-go withholding tax, which legally requires companies to withhold certain amounts from payments employers make to their employees. The ABN is particularly useful, as companies must withhold amounts when paying other companies unless the ABN is quoted in the invoice. These withheld amounts must be paid to the Tax Office.
It may be known as the land down under, but it is a major global business hub. Company incorporation in Australia is not so difficult, but regulations can differ from state to state and a professional services firm is needed to help determine the best pathway to taking advantage of the immense benefits provided by Australia as a jurisdiction. A savvy entrepreneur investing in Australia with the assistance of the right global services provider can quickly and efficiently form a company capable of effectively meeting any desired business objectives.
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