You may have found this page as your business has decided to take the leap and set up in Australia. It’s important you then ensure your move is both strategic and compliant to ensure a seamless expansion to the Australian market. Below, we step you through some key legal considerations to think about before opening up offshore.
Step 1: Running On or Off Shore
The first decision you will likely make during this process is whether you run your business as an Australian entity or a non-Australian entity. Deciding on a correct business structure is an important planning decision to make and there is no right answer. You should also engage an Australian accountant for local tax advice and to gain further insight.
Operating as a non-Australian Entity
You can register as a foreign company with the Australian Securities Investment Commission (ASIC). Your business must also appoint a local agent to serve as a registered Australian officer and receive important notices. It’s important that you are familiar with Australia’s tax requirements and legislation as you will not be exempt from domestic laws.
Operating as an Australian Entity
You may decide to seek advice on what entity to operate as in Australia. This will depend on what are your business’ goals and aims for the Australian market. You can run your business by establishing a company, partnership, joint venture or trust (discretionary or unit). A typical business structure is setting up a private proprietary company limited by shares.
Step 2: Incorporating
You will then need to incorporate your company in Australia. This is a relatively inexpensive process and can be expedited to meet the demands of your business. We have set out below a quick checklist as to what your business requires for incorporation.
- An Australian Company Number (ACN): An ACN is a nine-digit number that allows for company identification. It’s a duty of the company director to advertise this number on all official company documents.
- Company Director: At least one company director must reside in Australia and all directors of the company must be over 18 years old. The other directors can be foreign provided at least one is local.
- Company Secretary and Company Public Officer: You must appoint a company secretary and public officer to ensure the company complies with Australian tax obligations.
- Shares: The share capital of your Australian entity can be a nominal amount. There is no minimum share capital requirement. For instance, a company can be incorporated with a share capital of $1 (AUD).
Step 3: Taxation
Once you have incorporated your company in Australia, you will need a Tax File Number (TFN) from the Australian Taxation Office. This number will assist with reporting obligations to ASIC. Some key tax obligations to look out for when you speak with your accountant include:
- Company tax (PAYG)
- Capital Gains Tax
- Duties, and
Australia’s tax period is from 1 July to 30 June.
Step 4: Leasing Premises
You may then decide to set up a base for your business depending on the purpose of your Australian venture. Whether you choose to enter a lease or purchase real estate, you should be mindful of the contracts involved as well as local legislation. It is a good idea to have a commercial leasing lawyer review your lease to ensure your business’ conduct is permitted on the premises. Real estate purchases are also subject to foreign investment restrictions. As a rule of thumb, property over $50 million in value will be subject to regulatory body approval.
Step 5: Employees
If you employ locals, you must comply with Australia’s Fair Work Act 2009 as well as any applicable Award standards, tax legislation and superannuation requirements. You will also need to know if any specific State Acts apply.
What will you need to engage local employees?
You will need to familiarise yourself with local and national employment legislation, or engage an employment lawyer to assist. It’s also necessary to have an employment agreement in place which will limit the employer’s liabilities and the employee’s duties. You may also want to think about confidentiality and non-compete clauses as well as workplace policies addressing anti-discrimination, sexual harassment, equal opportunity and social media/Internet use.
If you decide to bring on board staff from your country of origin, ensure that they have the appropriate paperwork and Visa. It is a criminal offence under the Migration Act 1958 to allow someone to work who does not have the necessary permissions or work permits.
Step 6: Intellectual Property
When setting up your business in Australia, it’s important to register your company’s’ intellectual property with IP Australia to not only protect your brand but ensure you are not infringing on any Australian companies rights.
Does your business have trade marks and patents? You will again need to register these to enjoy the same proprietary rights you have in your country of origin. It’s often sensible to plan ahead and register your IP in the countries you wish to expand to later down the track.
If you have any questions about setting up your business in Australia, get in touch with our commercial lawyers on 1300 544 755.