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Company registration in Australia

Australia is widely recognized as one of the best countries in terms of living standards, with its economy consistently delivering impressive results for the past 28 years. The increasing attractiveness of the country as a place to start a company is mainly due to the promising chances it offers for making money through investments and business ventures. Company registration in Australia provides a secure environment for conducting business, a straightforward company setup process, a well-developed legal framework and promising trends in reducing tax rates. Additionally, Australia's appeal to foreign citizens is driven by substantial government support for entrepreneurship.

Company registration in Australia

Posted 3 November 2023

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Summary

No requirements. Typically AUD 1

Present

At least one director must be an Australian resident

Resident companies pay tax on worldwide income

Non-resident companies pay tax on income derived from sources within Australia

Relative to other countries

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Diane, partner of GFLO Consultancy

Advantages of company formation in Australia

Australia boasts numerous advantages that attract investors and entrepreneurs. Some of the most common ones are listed below.

  • Steady economy

Australia’s economy is known for its stability. It provides a favorable environment with low investment risk and significant growth prospects. Currently, Australia has been experiencing economic growth for many years, a remarkably rare feat in the modern world. Australia’s diversified economy, among other factors, ensures the necessary level of economic development. There is every reason to expect that the country will successfully develop further.

Interesting:

Diversified economy refers to an economy that enables a shift from one income source to many different sources across various sectors. In other words, several major profitable directions are developed instead of just one, ensuring the economy’s stability and reliability. If one “link” breaks, the other sectors prevent it from affecting the economy’s stability.

  • Strong connections with major world regions

Australia is a reliable partner for trade and investment. It maintains close business and trade ties with the United States, China, Japan, India, and Korea, offering significant opportunities for business development. Australian free trade agreements further facilitate the smooth flow of goods, services, and investments with major countries worldwide.

  • Numerous thriving business sectors, ideal for both company setup and investment

The most developed sectors of economy in Australia include:

Agribusiness

Education

Energy and resources

Healthcare

Tourism

Financial services

Innovation and science

Agriculture

  • Fast and simple business setup process

Company registration in Australia is straightforward. It can take as little as one day, provided all necessary documents are submitted correctly and there are no issues with the Registry. The process is highly automated, which is another undeniable advantage when choosing this jurisdiction, as it significantly speeds up the process.

  • Government support

On the Australian Government website you can find various financing programs, grants, and events that support business development. If a business meets the government’s criteria, it can expect not only financial assistance but also opportunities to enhance the knowledge and skills of business owners through various events, conferences, webinars and workshops aimed at improving qualifications and funded by the government.

Legal forms of business organization in Australia

Australia offers a standard list of organizational and legal forms, each of which is available for registration. According to the Corporation Act 2001 in Australia, there are two groups of companies: proprietary and public. All proprietary companies have restrictions on freely issuing shares and the number of shareholders, which must not exceed 50.

Among proprietary companies in Australia, there are:

  • Proprietary Limited by Shares Company. Shareholders of this type of company are not personally liable for the company’s obligations with their entire assets. Shareholders are only liable for the company’s obligations up to the amount of their contribution to the share capital. This form is most common for small and medium-sized businesses in Australia.
  • Proprietary Unlimited Company with Share Capital. In this type of company, even though shareholders also contribute to the share capital, their liability is not limited by their contribution. Shareholders have full liability for all of the company’s obligations.

Public companies do not have such limitations on the number of shareholders, and their shares are freely tradable.

Among public companies in Australia, there are:

  • Public Company Limited by Shares. In this type of company, there is also a share capital, and shareholders are liable for the obligations within the limits of their contribution to the share capital.
  • Public Unlimited Company with Share Capital. Shareholders have unlimited liability for their contribution in the share capital of the company.
  • Public Company Limited by Guarantee. In this type of company, members contribute a fixed sum — a guarantee — up to which they are liable for the company’s obligations.
  • Public No Liability Company. A company can be registered as a “no liability company” if:
    • the company has share capital;
    • the company’s constitution states that it is formed solely for mining purposes;
    • according to the constitution, the company is not entitled to call for payment on shares from a shareholder who has not paid for them.

Australia also allows for the registration of partnerships. The registration procedure of a company in this form, its features, structure, and partnership liability issues are regulated by the Partnership Act 1963 and the Limited Partnerships Act 2016.

The number of members in partnerships varies from 2 to 20 (with some exceptions), who engage in joint activities for profit. In Australia, there are general partnerships and incorporated limited partnerships.

Interesting:

A significant advantage of partnerships is that a partner’s share in the company’s losses can be offset against their other personal income under certain conditions and can be used for tax purposes in the future. Since the partnership does not pay tax on its income, and instead, each partner pays tax on their share of profits, any offsets can reduce the taxable base.

The relationships between partners, as well as between partners and the partnership, are generally governed by the Partnership Agreement.

The process of company registration in Australia

All companies in Australia must be registered with the ASIC – Australian Securities & Investments Commission. You can find a lot of information for individuals looking to register their company or seeking answers during business operations on the Business.gov website.
To initiate the company registration process in Australia, you will need identification documents for all company participants (feel free to seek details with our advisers). Additionally, you should provide the following information:

  • 2-3 preferred names for your future company in order of priority;
  • the structure of your future company (identifying the director, shareholder, and beneficiary);
  • the type of business activities your future company will engage in.
Interesting:
On the Business.gov.au website there is an excellent “Help me decide” tool that can assist in determining the business structure that best suits your needs and provide important considerations.

After gathering all the necessary documents and information, you can commence the company registration procedure. The entire process, from obtaining the required documents to creating the final set of corporate documents for your established company, involves the following steps:

  1. Verification of company names and selection of an available name. The name-checking process typically takes 1-2 hours. You can reserve a company name with ASIC.
  2. Preparation of forms and documents for submission to the Registry.
  3. Company registration itself. The registration process takes around 2-5 business days from the moment all necessary forms and documents are submitted to the Registry. Each company in Australia is assigned a unique nine-digit number known as the Australian Company Number (ACN), issued by the ASIC. Companies automatically receive an ACN upon registration.
  4. Assignment of ABN (Australian Business Number) and TFN (Tax File Number) for business identification.
  5. Preparation of constitutional documents for the registered company and ordering a corporate seal (if necessary).
  6. Notarization and apostille of documents (if necessary). The notarization process takes 1-2 days, while apostille takes 6-8 days.
Interesting:
In Australia and New Zealand information about companies can be found on the ASIC website. There’s also a specialized resource called NZAU Connect, an app that allows you to search for companies in Australia and New Zealand.
Important:

Having a registered address within Australia is a mandatory requirement for company registration. In addition to the address, the director and public officer must be residents of Australia.

Tips to keep in mind when conducting business in Australia

  • When filing reports, remember that besides the annual tax return all companies registered for GST (Goods and Services Tax) purposes are required to submit GST reports. You can learn more about GST reports in the “Filing and Preparing Reports in Australia” section below.
  • After registering your company, you need to obtain an Australian Business Number (ABN). People often misassume that this number is the same as the company number assigned during registration, but that’s not accurate. The company number, which is automatically given upon registration, is known as the Australian Company Number (ACN). Obtaining an ABN involves additional formalities. An ABN is a unique 11-digit number that identifies your business. Both companies and individual entrepreneurs can obtain an ABN.
Important:
The ABN does not replace the company’s tax file number (TFN). On the contrary, you need to specify the TFN when obtaining an ABN, which can be acquired during the company registration process.

To obtain an ABN, you need to prepare a document package for the company and its founders (feel free to reach out to our experts for details). The ABN application processing time can range from around 30 days to as little as 1 day. Obtaining an ABN allows you to conduct business openly, with trust from the government and tax authorities.

Taxation in Australia

Questions regarding taxation in Australia are succinctly addressed on the ATO (Australian Taxation Office) website. Resident and non-resident companies in Australia are subject to different tax rules.

Important:
A company is considered a resident in Australia if:

  • It is incorporated in Australia,
  • It is incorporated outside Australia but carries out activities in Australia,
  • It is controlled and/or managed from Australia,
  • It has shareholders with a controlling interest who are residents of Australia.
  • Company profits tax

On the ATO website, the standard corporate tax rate in Australia is 30%. The tax rate can be reduced to 27.5%. The reduced rate is applicable if the company’s annual turnover is less than AUD 50 million (currently around USD 32 million).

Resident companies in Australia pay corporate tax on profits earned from worldwide sources. Non-resident companies in Australia are only taxed on profits earned within Australia and from sources within Australia.

  • Dividend tax

Dividends distributed to non-resident shareholders in Australia are subject to a tax rate of 0% if the company has fully met its tax obligations beforehand. This measure is taken to avoid double taxation. If the company has not paid its taxes at the time of dividend distribution, the dividend tax rate for non-resident shareholders is typically 30%.

  • Capital gains tax

Capital Gains Tax (CGT) in Australia is applicable but is not paid separately; it is included in the overall profit tax. Even though a separate tax isn’t paid, reporting capital gains and losses in your tax return is required. For residents, CGT applies to all assets both within and outside Australia. For non-residents, it applies only if the CGT asset is considered “taxable Australian property,” as specified on the ATO website.

Interesting:
Most personal assets are exempt from CGT (e.g., a home, car, furniture).
  • GST in Australia

GST in Australia is known as the Goods and Services Tax (GST). GST is a general tax of 10% on most goods, services, and other taxable supplies sold or consumed in Australia.

The frequency of GST payments depends on the GST turnover. If the GST turnover is USD 20 million or more, reporting and paying GST is required monthly. Apart from businesses with this turnover, other companies may also be required to report and pay GST monthly, as notified by the ATO.

If no such notification from the ATO is received, and the GST turnover is less than USD 20 million, reporting and paying GST quarterly is an option.

If a company voluntarily registers for GST and its turnover is less than USD 75,000 (USD 150,000 for non-profit organizations), reporting and paying GST annually is possible. You can choose to report and pay GST annually.

Preparation and submission of reports in Australia

All companies in Australia are required to prepare annual financial statements for taxation purposes, known as Tax Returns. The reporting period in Australia typically begins on July 1st and ends on June 30th, unless agreed otherwise with the ATO.

Financial statements must be submitted annually within specified deadlines. The deadline depends on the end date of the reporting period. If a company’s reporting period ends on June 30th, the deadline for submitting the annual Report is considered to be January 15th (for large and medium-sized enterprises) or February 28th (for small businesses). If your company has chosen a different reporting period end date, get in touch with our advisers, and we will guide you on the reporting deadlines.

Additionally, GST reporting needs to be prepared, and depending on the criteria mentioned earlier, it can be lodged annually, quarterly, or monthly.

GST reporting can be submitted in various ways at the discretion of the company, including full reporting, simplified reporting using the BAS form, or using the installment method (for example, paying GST quarterly and reporting GST annually).

Interesting:
The installment method is used in two cases:

  1. When the GST turnover of a commercial organization is less than USD 10 million;
  2. When the company is non-commercial, and the GST turnover is USD 2 million or less.

The simplified reporting method, known as “Simpler BAS” (BAS – Business Activity Statement), is available for companies with a GST turnover of less than USD 10 million that do not use the installment method.

Conclusion

Opening a company in Australia provides access to a country with a developed economy and attractive conditions for doing business. The Australian Government’s favorable stance towards entrepreneurs and various support programs create the necessary foundation for building a successful business.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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