Guide to doing Business in Australia

Australia boasts an established legal, political, financial and social system and its low tax and adaptive regulatory environment making it a business-friendly nation.
Below is a snapshot of our comprehensive guide to doing business in Australia starting with 11 things to know when navigating through the legal, tax and accounting environment in Australia.

11 Things about doing business in Australia

What is the Australian fiscal year?

Companies normally file an annual tax return for the Australian financial year of 1 July to 30 June however companies can request a different year end so that it aligns with your parent entity.

What is the local currency?

Australia’s national currency unit is the Australian Dollar (AUD). 

What type of business structures can you use to carry on a business in Australia?

Generally, there are five types of business structures that you can use to conduct business in Australia.

• Individual (sole trader)
• Partnership
• Joint Venture
• Trust
• Company (public or private)

Each structure has a number of benefits and disadvantages, so it is important to ensure you understand the differences between them, as they have different tax, legal and compliance requirements. 

Does my business have to have an ABN?

An ABN is an 11 digit number issued by the Australian Business Register. 

All businesses carrying on an enterprise in Australia are required to have an Australian Business Number (ABN).  This provides some certainty that the entity carrying on business is registered with the Government and also prevents withholding on payments made to it.

Does a company have to have a local director and company secretary?

A company is required to have a minimum number of directors and secretaries. From 5 April 2022, both Australian and foreign Directors also need to obtain a Director Identification Number with the Australian Business Registry Services (ARBS) before appointment.

A proprietary company

Requires at least one director who ordinarily resides in Australia. A proprietary company does not need to have a company secretary but if it does one or more need to reside in Australia.

A public company

Requires a minimum of three directors, of which two must reside in Australia. A public company must have at least one secretary who resides in Australia.

What are the major Australian regulation authorities?

Australia has a robust and highly regulated business and consumer environment. This provides confidence in the Australian marketplace and enhances investment. The major regulators in Australia are:

• The Australian Taxation Office (ATO)
• The Australian Competition and Consumer Commission (ACCC)
• The Australian Prudential Regulation Authority (APRA)
• Australian Securities and Investments Commission (ASIC)
• Australian Business Registry Services (ARBS)
• Australian Securities Exchange (ASX)
• Reserve Bank of Australia (RBA)

Are there foreign investment regulations that businesses need to be aware of?

The Australian government adopts an “open for business” stance and aims to reduce barriers for investment.  There are a number of considerations for foreign investment in Australia.

Foreign investment is regulated by the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA). Certain foreign investment proposals will require review and approval by the Foreign Investment Review Board (FIRB).

Additionally, there are industry-specific regulations that affect foreign investment into certain industries, e.g. banking.

What taxes are payable and who levies these taxes?

Both direct and indirect taxes are levied in Australia by the:

• Australian Federal Government,
• State/Territory Government, and
• Local Government.

A majority of taxes payable are levied and collected in Australia by the Federal Australian Government. The Federal tax collection authority is the ATO.  These taxes are applied consistently across Australia. Examples are income tax and Goods and Services Tax (GST).

The State/Territory and Local Government where you operate your business may also levy taxes on and each State/Territory’s taxing points can vary in terms of rates, thresholds and exemptions. Examples are stamp duty on transfer of property and payroll tax.

When does my business have to be audited and filed with the relevant authority?

Section 292 of the Corporations Act 2001 (Cth) (Corporations Act) sets out the types of entities required to prepare and file financial reports with ASIC. Some of the more common entities required to report are:

• disclosing entities
• public companies
• companies limited by guarantee
• large proprietary companies
• registered schemes
• small proprietary companies that are foreign-controlled
• Registered charity registered with ACNC (Australian Charities Not-for-profit Commission)

Sustainability laws and recommendations

Entities doing business in Australia may be required to follow laws and recommendations in relation to sustainability reporting that include:

• Modern Slavery Statement;
• Climate-related disclosures; and 
• Recommendation to disclose environmental and social risks for listed entities

Other than taxes, what are some of the more relevant employment obligations businesses have?

Businesses employing people in Australia need to be aware of their general employment obligations, such as:

• Compulsory superannuation (a form of pension contribution scheme) – where employers are required to make minimum contributions on behalf of their employees.
• Workers Compensation – a mandatory insurance scheme in which employers must participate. Employers are obligated to compensate employees suffering from a work-related injury or illness.
• Occupation Health and Safety – state based laws which require employers to provide a safe workplace for employees. Breaches can see criminal prosecution and heavy monetary penalties.
• National Employment Standards – there are a number of minimum employment entitlements which apply to all employees such as maximum weekly hours, leave entitlements etc.

Different industry sectors have different obligations and the terms and conditions under which employees can perform work. Federal and State Awards, common law employment contracts and registered workplace agreements set out the terms and conditions for employers and employees.

Learn more about doing business in Australia by downloading your free copy of the guide below

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Visit Mazars Australia for more information on the services available to help you set up your business.