This is particularly true for foreign entities that are unfamiliar with the local market conditions, regulations, and culture. Navigating the Australian business landscape involves more than just identifying market opportunities; it also entails a thorough understanding of our country's tax and other regulatory obligations.
As tax laws in Australia are both complex and subject to change, businesses contemplating entry into this market must carefully assess tax obligations and strategies to ensure compliance and maximise productivity.
So, what are the essential tax and regulatory considerations for establishing and operating a business in Australia?
Corporate Structure
The primary focus of any structure should consistently revolve around achieving commercial success and operational efficiency. Nevertheless, it's equally important to consider other factors such as safeguarding assets, managing taxation, securing funding, repatriating profits, adhering to regulations, and ensuring a smooth exit or wind-down process.
Company Law Requirements
Corporate entities in Australia are regulated by the Australian Securities and Investment Commission (ASIC). To operate in Australia, the subsidiary is required to be registered with ASIC and prepare annual returns.
Income Tax
Like most tax systems around the world, the Australian taxation system levies income tax based on residency and source of income.
While a company incorporated in Australia is automatically deemed to be an Australian taxation resident under local taxation law, consideration also needs to be given to taxation laws in the parent's country of origin, as well as the relevant international tax treaty (or Double Tax Agreement) and Multi-Lateral Instrument.
Goods & Services Tax (GST)
Like VAT in the UK and Europe, GST is a broad-based tax levied at a rate of 10 per cent on most goods, services and other items sold in Australia or imported to Australia. Generally, registered businesses include GST in the price of sales to their customers and claim credits for the GST included in the price of the business purchases.
Pay As You Go (PAYG) Withholding
Business taxpayers are required to withhold from certain payments and remit these amounts to the ATO.
Employer Obligations
There are many employer obligations to consider when setting up a business in Australia. Some of these include:
- Payroll Tax
- WorkCover
- Superannuation
- Single Touch Payroll
- Fringe Benefits Tax (FBT)
Leveraging specialised expertise to help navigate the above requirements can be a game-changer.
Grant Thornton’s Outsourced CFO services can provide access to finance professionals experienced in all aspects of Australian regulation and compliance. This can be in the form of a fully outsourced finance function operating as an extension of your international finance team or working collaboratively to support the existing finance team based in Australia. This bespoke service offering is fully flexible and can be scaled up or down as necessary to support during busy periods or as your business grows.
If you are interested to explore how our Outsourced CFO services can assist you in establishing a business presence in Australia, please do not hesitate to get in touch.
Learn more about how our Outsourced CFO services services can help you
