Expanding Your Business into Australia: Key Tax and Operational Considerations

May 14, 2024
| minute read
Expanding Your Business into Australia: Key Tax and Operational Considerations

Considering expanding your business into Australia? Before you take the leap, it's crucial to understand the key factors involved in setting up a commercial presence in this dynamic market.

We delve into the insights shared by Blair Lucas, Commercial Director at Acclime, as he outlines the essential considerations for entering the Australian market.

Introducing Acclime

Acclime boasts a strong presence across the Asia Pacific region, with operations in 14 markets, including Australia, New Zealand, Singapore, and the United States. With over 15,000 clients and 1300 employees, Acclime offers comprehensive support to companies looking to expand seamlessly across the region.

Understanding Company Structures in Australia

  • In Australia, foreign companies have two primary options for corporate structures:
  • Proprietary Limited Company (Pty Limited) and Branch (Registered Foreign Company).
  • The Pty Limited Company, similar to Singapore's Private Limited Company, is the preferred choice for most clients due to its simplicity and limited liability.
  • Setting up a Pty Limited Company typically takes around an hour, whereas establishing a Branch can take two to three months due to paper-based processes and financial disclosure requirements.

Legal Requirements: Registered Office and Resident Director

  • Companies setting up in Australia must have a registered office and at least one resident director and a resident public officer.
  • The registered office serves as the official address for the company and must be capable of maintaining company books and accounts.
  • Finding a resident director can be challenging due to high liabilities, but they play a crucial role in providing advice and guidance.
  • All directors of Pty Limited company must have applied for an Australian Director Identification Number (DIN) before they can be appointed.

Navigating Operational Challenges

  • Legal permissions may differ from operational realities. For example, while there are no legal restrictions on opening a crypto company, operational challenges such as obtaining insurance and banking services may hinder business activities.
  • Location flexibility: Company law in Australia is administered federally, allowing businesses to operate nationally without the need for additional registrations in each state. However, state registration may be necessary for accessing state grants.

Taxation in Australia

  • Federal government handles most taxation in Australia, including corporate income tax, Goods and Services Tax (GST), and Pay As You Go (PAYG).
  • Corporate income tax rates can be comparatively high, with a base rate of 25% for companies with less than $50 million in turnover.
  • Understanding and complying with taxation requirements is essential for smooth business operations.

Company Setup Timeframes and Processes

  • Once prospective directors have applied for their Australian Director Identification Number (DIN), establishing a Pty Limited Company can be done within an hour, but obtaining an Australian Business Number (ABN) and tax registrations typically takes around four weeks.
  • Opening a business bank account is somewhat quicker, with a process duration of around 10 business days.

Leveraging R&D Tax Incentives

  • Australia offers lucrative R&D tax incentives to companies engaging in eligible research and development activities.
  • Companies with aggregated global revenue of less than $20 million can avail a 43.5% cash refund on eligible R&D expenditure.

Using Australia as a Launchpad for Further Expansion

  • Australia can serve as a strategic base for expanding into other markets, such as the USA or Asian countries, due to its relative ease of entry and familiarity with the region.

Haymarket HQ is a go-to-market accelerator that helps founders to access revenue and capital in new growth markets. We’ve supported 1000+ companies into new markets in Australia, across Southeast Asia and beyond.

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