subject: Setting Up A Company In Australia [print this page] Why Australia? Why Australia?
According to the World Competitiveness Yearbook, which assesses the overall strength of countries economies, Australia has been ranked as the most resilient economy in the world for six years out of seven between 2002 and 2008. With its increasing integration with emerging Asian economies, Australia offers excellent investment opportunities for firms seeking to extend their operations into the Asia-Pacific region.
Boasting a GDP per capita (US$46,278) that is higher than that of Germany (US$40,870), UK (US$35,334), France ($42,747), Australia is a country of consistent economic performance and stability. The developed financial infrastructure and stable bank regulatory system in Australia offer huge incentives for the influx of foreign direct investments in recent years. Company set-up process in Australia
In order to set-up a business in Australia, investors must first decide on the type of company which they wish to form and operate. Public companies must have at least 3 appointed directors, 2 of whom must be residents in Australia, and one company secretary living in Australia. On the other hand, proprietary companies require only one director and one member, with less stringent requirements on the residency of the director.
After deciding on the type of company that is to be established, investors should check with the Australian Securities and Investments Commission (ASIC) that their desired company name is available, and to reserve the name. The company name can be reserved for two months.
Under the Australian Corporations Act, all companies must be registered with the ASIC. Subsequent to this process, companies must also register for an Australian Business Number (ABN). The ABN is used in business transactions with other companies, and is typically listed on commercial invoices. In addition, companies would need an ABN in order to register for Goods and Services Tax (GST). A business needs to register for GST if it has a GST turnover of $75,000 or more.
Other Tax considerations
Tax File Number (TFN): A TFN is a number issued by the Tax Office to companies, and is a unique reference number that is used to quote to the Tax Office when applying for an ABN or when lodging income tax returns. Although it is not mandatory for companies to have their own TFN, it is recommended that they do so as it makes the monitoring and administration of tax-related activities easier.
Pay-Roll Tax: the Pay-roll tax is a State tax levied on the wages paid out by employers. The rates and exemption threshold vary between different States, and companies should seek taxation advice from their local authorities.
Pay-As-You-Go (PAYG) withholding: PAYG withholding is a legal requirement on companies to withhold amounts from payments made to employees (e.g. directors, contractors). Companies must also withhold amounts from payments made to other businesses if they do not quote their ABN on invoices. Withheld amounts must be reported and paid to the Tax Office.
Conclusion
Regulations on the setting up of companies might vary extensively, depending on the State in which the business is formed. Healy Consultants is able to simplify the formation process for our clients by providing detailed engagement plans which comprehensively address the legal requirements of the firm.
by: Lawrence Smith
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