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The Ultimate Guide To
Employment in Australia

Australia Facts

Population size: 24,598,933
Currency: Australian Dollar (AUD)
Capital city: Canberra
Languages spoken: English
Ease of Doing Business: 7/190

Employing in Australia: What You Need to Know

Australian employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. Other factors that complicate matters include the differences between states in payroll administration.  For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Australia.

Employment Law in Australia multiple levels of influence: aside from its foundation in common law principles, there is minimum standards defined by legislation (primarily the “Fair Work Act”). However if the employment falls under a statutory “Award” it may have differing or extra conditions on top of the legislation. Collective agreements such as “Enterprise Bargaining Agreements”, can apply specific conditions on the top legislation or Award.

While employment law was mostly unified with the introduction of the Fair Work Act, the state of Western Australia did not fully acquiesce to referral of power to the federal government. Most types of employers are covered by the federal government, and employment law in general in Western Australia remains highly similar, but as a warning, there may be variations in obligations and standards.

Exceptions include State employees working in public sector agencies from New South Wales, Queensland, South Australia and Tasmania, local council workers in New South Wales, Queensland and South Australia, and in Western Australia where the Fair Work Act legislation only covers workers employed by a “constitutional corporation”, which includes trading and financial corporations, corporations formed outside of Australia, and federal government agencies.

For these reasons the following is a very general guide, mainly based on the minimum obligations set out in the federal legislation. 

Key Factors to Consider When Employing in Australia

There are several key areas to be aware of within Australia’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    All employees in Australia will have a common law contract of employment that specifies the terms and conditions of employment.

Employee Entitlements

Information Explanation
Statutory Working Hours ?

38 hours

The public holidays for 2019 in Australia are as follows:

  • New Year’s Day (1 January)
  • Australia Day Holiday (28 January)
  • Good Friday (19 April)
  • Day following Good Friday (20 April)
  • Easter Sunday (21 April)
  • Easter Monday (22 April)
  • Anzac Day (25 April)
  • Queen’s Birthday (10 June)
  • Labour Day (7 October)
  • Christmas (25 December)
  • Boxing Day (26 December)
Public Holiday Pay Rate ?

Public holiday pay rates differ depending on the state or territory in which the employee is working. A public holiday pay calculator is available on the Australian Government Fair Work Ombudsman website.

Working on Sundays ?

Employees are allowed to work on Sundays and are entitled to a penalty rate i.e. a higher pay rate. This depends on the award, enterprise agreement and/or employment contract under which they are working. The relevant weekend pay rates for an award can be found here.

Disclosure and Confidentiality of Personal Information ?

The Privacy Act 1988 (Privacy Act) regulates the collection and handling of personal information through minimum privacy standards. These are known as the Australian Privacy Principles (APPs) and apply to all private sector business with an annual turnover of more than $3 million, all private health service provides and all government agencies.

In most cases, the Privacy Act and the APPs will not apply to employee records, and only apply if the information is used for something that is not directly related to the employment relationship. Complying with privacy laws is a matter of best practice of businesses.

Employee Protection and Anti-discrimination Rights ?

The Australian Human Rights Commission Act 1986 (Cth) protects employees from discrimination in the workplace due to their race, gender, religion, political opinion, medical record, criminal record, and trade union activity, in addition to other factors. The Fair Work Ombudsman receives complaints from employees who are experiencing discrimination, bullying, harassment or other adverse treatment in the workplace.

Time Off Work ?

Community service leave: The employee is entitled to paid time off of up to 10 days for jury service (after 10 days is unpaid) and unpaid leave for voluntary emergency work.

Medical Leave ?

All full-time employees (except casual employees) are entitled to a minimum of 10 days paid personal leave each year. These days can be used for time off for sickness. The employee can take personal leave if they or an immediate family member is sick, injured or has an unexpected emergency. In addition, employees may take up to two days of unpaid leave under ‘compassionate’ grounds – such as due to the death of a family member and 2 days unpaid caregiver’s leave.

Annual Leave Accrual Entitlement ?

An employee (other than a casual employee) is entitled to 4 weeks of paid annual leave for each year of service with the employer. An employee classified as a ‘shiftworker’ is entitled to 5 weeks of paid annual leave.

Does accrual start from first day of work ?

Yes

Annual Leave Expiry ?

Annual leave does not expire.

Annual Leave Monthly Accrual ?

1.67 days of annual leave is accrued per month, pro-rated for each day worked.

Annual leave reporting frequency ?

Monthly

Annual Leave Accrual Cash Out ?

Annual leave may be cashed out as long as the employee will have at least 4 weeks of annual leave left over. This needs to be supported by a written agreement between the employer and employee.

Annual Leave Accrual paid to Employee ?

The annual leave accrual is paid to the employee through payroll.

Managing pre-existing Annual Leave ?

Pre-existing annual leave can be carried over into the GEO employment.

Accrued Leave at Termination ?

At termination, accrued annual leave must be paid out in full (unless it can be carried over into a new employment).

Negative annual leave accrual ?

By agreement between the employee and employer, the employee may be entitled to ‘annual leave in advance’ where they are paid for more annual leave days than they have accrued. Unless specifically covered by the award, if the employment terminates whilst the employee has a negative leave accrual, there is no recourse for the employer to deduct that amount from the termination payment.

All full time employees are entitled to a minimum of 10 days paid personal leave which can be used for sick leave.

Maternity Leave in Australia ?

Employees in Australia are eligible for unpaid parental leave if they have completed at least 12 month of service with the employer.

The employee should inform their employer of their intention to take unpaid parental leave by giving at least 10 weeks written notice. Each eligible member of an employee couple may take a separate period of up to 12 months of unpaid parental leave. If only one person is taking leave, that employee may request up to 12 months.

For a pregnant employee, leave can start up to six weeks before the expected date of birth. If the employee is not giving birth to the child, leave starts on the date of birth or placement of the child.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

A transitional entitlement for employees as outlined in an applicable pre-modernized award, pending the development of a uniform national long service leave standard

Severance / Redundancy Pay ?

The Fair Work Australia website reports that for any wages and holiday time owed, the employer must also pay a severance if the employee is made redundant. If the employee has at least one year of continuous service and the employer employs 15 (i.e. does not fall under the ‘Small Business’ code) can be entitled to a maximum of 16 weeks pay).

Termination of Employment ?

The Fair Work Australia website reports that an employer must provide a minimum period of notice, as follows:

Less than 1 year                                1 week

Between 1 and 3 years                     2 weeks

Between 3 and 5 years                     3 weeks

Over 5 years                                      4 weeks

If the employee is over 45 years old, and has completed at least two years of service, additional one week’s notice is required.

 

The Fair Work Australia website explains the termination procedure in Australia. The employer must have cause for termination, and in particular it must not be unlawful (e.g. discriminatory on grounds of race, gender, etc) and not be “harsh, unjust or unreasonable”. Generally the employer must show they took reasonable steps, such as performance reviews and several formal warnings, and counselling the employee to give them a proper opportunity to understand and rectify any performance issues. Employees can be dismissed under the context of a redundancy so long as the redundancy is genuine.

Fixed-term contracts can allow the relationship to expire at the end of the term specified in the contract.

Probation

Information Explanation
Probation Period ?

Probation period is also known as “minimum employment period”. According to IHR Australia, the maximum period in Australia is six months, or up to twelve months for small business employers (businesses with fewer than fifteen staff).

GEO Solutions or DIY Employment in Australia?

Companies entering Australia must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Australia Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have an Australian entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated company ready to run payroll and may be a costly option.  Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

 

Outsourcing Employment Through a GEO Employer of Record Service

Using Shield GEO Employer of Record Services in Australia

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Australia. For companies which intend to employ their staff directly through their incorporated Australian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Australia.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Australia.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Australia

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Australia

– the company needs help with tax, employment, immigration and payroll compliance in Australia

Shield GEO can contract directly with the company to employ and payroll their staff in Australia.  Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Payroll

Payroll Australia
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote.

Notes

Payroll normally occurs on the 28th of every month, but other payroll dates are also quite common.

Currency ?

Australian Dollar (AUD)

Payment Frequency ?

Monthly

Statutory Requirements for Employee Payslips ?

There are no statutory requirements for employee payslips.

Documents Supplied to Employee at the End of Tax Year ?
  • Payment summary with salary and deductions
  • PAYG summary or Group Certificate*

*From 2018, Group Certificates are being phased out and ‘Single Touch Payroll’ is being introduced which allows employees to view their  tax and payroll information via the myGov portal.

Income Tax Deductions ?

Employees may be entitled to deductions on their assessable income for the following:

  • Employment expenses (incurred in earning employment income) e.g. business-related travel expenses, professional subscriptions, uniform etc.
  • Expenses incurred in producing other income e.g. for rental property, deductions can be claimed for interest paid on loans to fund the purchase of the property, insurance and maintenance costs etc.
  • Superannuation contributions (up to $25,000 per year)
  • Charitable contributions
Tax
Income Tax Rates

Australian residents are generally taxed from all global sources of income. People who are only temporary residents of Australia are generally taxed only on income earned within Australia. Some individuals may be classified as an Australian resident for tax purposes even if, in the normal sense of the term, they are not an Australian citizen or permanent resident.

 
Grossed income Tax Rate (%)
0 – 18,200 0
18,201 – 37,000 19
37,001 – 90,000 32.5
90,001 – 180,000 37
180,001+ 45

A Medicare levy of 2% on taxable income also applies to most residents.

An additional Medicare levy surcharge of 1% to 1.5% on taxable income is levied on individuals with taxable income equal to or exceeding $90,000 who do not have private health insurance. 

Income earners with a taxable income of $37,000 or less are entitled to a low income tax offset of $445. This amount is reduced by 1.5 cents for every dollar over $37,000.

Tax Returns Supplied

Yes

Corporate Tax Requirements

Most companies pay instalments of tax on their income on a monthly or quarterly basis. Large companies with a turnover of AUD20 million or more are required to pay instalments on a monthly basis. A PAYG instalment system does not apply to companies with an annual tax liability of AUD8,000 that is not registered for GST. Corporations file an annual tax return with the Australian Taxation Office, generally due by the 15th of July.

Employers Social Security and statutory contributions

There is no social security in Australia. Employers are required to contribute 9.5% of an employee’s earnings base to a registered superannuation fund or retirement savings account on the employee’s behalf.

Employees Social Security and statutory contributions

If the employee does not have private health insurance, they are a Medicare Levy Surcharge applies to their taxable income.

The Medicare Levy Surcharge rates are as follows:

  Base Tier Tier 1 Tier 2 Tier 3
Single Threshold $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Family Threshold $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more
Medicare Levy Surcharge 0% 1% 1.25% 1.5%

 

Employer Social Security Limits ?

There is a maximum income base for employer superannuation contributions. For 2018/19, this is $54,030 per quarter (or $216,120 per year).

Employee Social Security Limits ?

Tax-deductible superannuation contributions (i.e. concessional superannuation contributions) are capped at $25,000 per year for every employee. Excess contributions are subject to tax.

Employees may also make non-concessional superannuation contributions if their superannuation balance is below $1.6 million, up to $100,000 per year or $300,000 over 3 years. Excess contributions are subject to a penalty tax rate.

Is employee social security deducted ?

Yes, concessional superannuation contributions are deducted from taxable income (see above).

Special Requirements for Expense Reimbursements to Employee ?

Expense reimbursements must be supported by a scanned expense receipt and approved expense report. 

Public Pension/Retirement Allowances ?

There are no public or private pension schemes as such.

All employees have a pension account which is funded by superannuation contributions made throughout the employee’s working life. Under the Superannuation Guarantee, employers must pay 9.5% of an employee’s Ordinary Time Earnings up to the maximum superannuation base. 

These superannuation contributions go into a registered superannuation fund or retirement savings account which the employee can draw down as a lump sum or income stream, upon satisfying a condition of release e.g. turning 65.

Are employees required to have private pension/retirement ?

There are no public or private pension schemes as such.

Apart from contributions made under the Superannuation Guarantee, employees are also able to make concessional superannuation contributions up to $25,000 per year. Contributions made under the Superannuation Guarantee are considered concessional contributions, and are included in the $25,000 cap.

They may also make non-concessional contributions if their superannuation balance is below $1.6 million, up to $100,00o per year or $300,000 over 3 years. 

Insurance requirements

Yes, statutory Medicare contributions are deducted at source through PAYG (Pay as You Go) Withholding. Almost all foreign nationals on a working visa, such as the Temporary Skill Shortage visa, are additionally required to be covered by private medical insurance that meets Department of Immigration and Border Protection (DIBP) requirements. Nationals of some countries will be covered by Reciprocal Health Care Agreements (RHCA) which allow individuals limited access to Medicare services. Private medical insurance is still recommended.

Shield GEO does not arrange private medical insurance directly but it is very easy to obtain.

No other forms of insurance are required.

Public Medical Insurance ?

Medicare gives Australian residents access to health care. It is partially funded by taxpayers who are required to pay a 2% Medicare levy on their taxable income.

Private Medical Insurance ?

Residents earning more than $90,000 in an income tax year who do not have private health insurance, are required to pay a Medicare levy surcharge of 1% – 1.5%, depending on their taxable income.

The government incentivises individuals to take up private medical insurance through Medicare levy surcharge exemptions and rebates on insurance premiums.

All foreign nationals on a working visa such as the Temporary Skill Shortage visa are required to have private medical insurance cover, that meets the Department of Home Affairs requirements. Nationals of some countries will be covered by Reciprocal Health Care Agreements (RHCA) which allow individuals limited access to Medicare services. Private medical insurance is still recommended.

Other Employee Insurance Required ?

Employees travelling outside Australia are recommended to have health insurance cover for the duration of their stay abroad. For business travel to the U.S., it is highly recommended for the employee to purchase travel insurance with medical insurance cover.

Private Medical Insurance Taxed ?

If the employer makes a contribution to the payment of private medical insurance premiums, it is taxed as a fringe benefit (effectively doubling the cost of the insurance). 

There are tax-effective ways for an employer to provide private medical insurance.

Can supply private health care

No, but it is very easy to obtain.

Will contributions by employer/employee to private pension incur tax? ?

Concessional superannuation contributions are tax-deductible up to the annual cap of $25,000. These contributions are taxed at 15%. Contributions above this threshold are subject to the employee’s marginal tax rate.

Non-concessional superannuation contributions are tax-free up to $100,00o per year or $300,000 over 3 years (for employees with less than $1.6 million in their superannuation account balances). Excess contributions are taxed at a penalty rate of 49% (47% + 2% Medicare levy).

General Employer of Record Service Terms

General Employer of Record Service Terms
Are there taxes that apply to invoices ?

For foreign companies, a GST of 10% applies to the service fee only.

Minimum assignment length ?

3 months

Payment Currency ?

Australian Dollar (AUD)

Onboarding Documents and Information Required ?

The following documents are required for onboarding:

  • Proof of identity or citizenship
    • For Australian citizens: valid Australian passport (photo identification page) only; or Australian citizenship/birth certificate accompanied by a driver’s licence
    • For Australian permanent residents: Australian permanent residence visa label, accompanied by a valid overseas passport
  • Tax File Number
  • Superannuation Choice form
  • Shield GEO CIF

Work Permits

Work Permits
Can Sponsor Work Permit

Shield can sponsor work permits for foreign employees in Australia.

Work Permit processing time

1 – 3 months

Work Permit process

The main work visa for Australia is called the TSS visa. To obtain a TSS the employee must be partaking in an ‘eligible occupation’. A list of eligible occupations can be found here. The employer provides Shield with the employee’s job description, job title and CV to make this assessment.

After eligibility is confirmed, the employee’s personal documents which generally include professional and educational qualifications, a copy of their passport and other identity documents are collected. Depending on the employee’s nationality and circumstances, they may need to show they meet the minimum English language requirements. An application is lodged. The employee needs to obtain private medical insurance in Australia (available online).

After approval the employee can enter Australia. The actual visa is issued and recorded electronically (it can be checked using the Visa Entitlement Verification Online or VEVO service). This means that upon arrival in Australia, the migration officials already have a record that the employee has an approved TSS visa.

Total processing time is at least 1 month.

Submission of original passport ?

The original passport is generally not required. A colour scanned copy qualifies.

Work Permit Submission Confirmation Documents ?

A Transaction Reference Number (TRN) is provided to the employee upon submission of the work permit application.

Work Permit Validity ?

Once the work permit application has been approved, the employee is notified in writing of the following information:

  • Visa grant number
  • Starting date of visa
  • Visa conditions
Are work permit processes different for different nationalities ?

Depending on their nationality, some employees are required to complete an English language test as part of the application. Although the core application process is the same for all nationalities, additional requirements may be applicable depending on the country of passport e.g. a language test, medical examination etc.

Can Work Permit be processed in country

The applicant can be in or outside Australia while their work permit application is being processed, subject to conditions.

If in Australia, the applicant must hold a substantive visa or a bridging visa A, B, or C. While the applicant may be allowed to enter Australia on a tourist visa, this would contradict their application for a work permit and they could be denied entry.

Is application processed in host or home country ?

This depends on whether the applicant is allowed to stay in Australia while their application is processed (see above). 

Can employee be in host country when application lodged ?

Yes

Can employee travel in and out of host country when application lodged ?

The employee is allowed to travel in and out of Australia if their bridging visa allows this.

Work Permit – When Can Employee Start Work ?

The employee can start work within 90 days of the work permit being granted, subject to any employment-specific onboarding processes and requirements to pay a bond.

Employee required to attend consulate/embassy in home country? ?

No

Work Permit Dependent Process ?

Most working visas such as the Temporary Skill Shortage (TSS) visa allow eligible family members to join the visa holder in Australia as subsequent entrants.

The visa holder can apply for their dependents to join them in Australia via their Immi Account. Family members must meet health and character requirements.

Work Permit Approval Notification Process ?

Once the work permit application has been approved, the employee is notified in writing of the following information:

  • Visa grant number
  • Starting date of visa
  • Visa conditions
Work Permit Restrictions ?

The employee is restricted to working for their sponsor for the duration of their visa. If they change sponsors, they may be required to submit a new visa application. The employee’s salary is also not permitted to exceed the amount declared on the application.

When Can Employee Travel to Host Country ?

The employee may travel to the host country (Australia) as soon as the visa is approved. They are given 90 days to enter Australia and start work from the date of approval.

Switch Business Visa to Work Permit?

If the individual is holding a valid substantive visa e.g. Business Visa in Australia when the work permit application is being made, it is usually not necessary for the individual to go offshore and re-enter.

Does the visa lead to settlement/residency ?

If the employee holds TSS visa with the same employer for 2 or more years, they may apply for permanent residency. This applies if the employer is an approved Standard Business Sponsor and hires the employee on a full-time basis as a permanent employee. Shield can assist employees with alternative permanent residency pathways.

Notice Period to Cancel Work Permit ?

The notice period for work permit cancellation is 28 days.

Business Visas

Business Visas
Can do Business Visa

Yes

Payroll and Tax in Australia

There are specific rules for payroll and taxation in Australia. The primary concerns for a foreign company that needs to comply with tax laws in Australia are: individual income tax for employees, social security costs, payroll tax, sales tax, withholding tax, business tax, workers’ compensation and permanent establishment concerns.

Information Explanation
Remote Payroll ?

A remote payroll in Australia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Australia. One option for a non-resident company to payroll its employees (local and foreign) in Australia is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.

Local Payroll Administration ?

In some cases, a company will register their business in Australia under one of the forms available, but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Australia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Australian payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Australian employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Australia to a GEO, like Shield GEO. This is possible for both foreign workers and Australian nationals. This is the easiest, fastest and safest way to payroll staff in Australia.

Shield GEO manages all aspects of payroll for workers in Australia including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

 

Jump to...

Setting up payroll in Australia

Information Explanation
Currency ? Australian Dollar - AUD
Employee Information Required ?

The following documents and information relating to the employee are required for setting up payroll:

  • Proof of identity or citizenship
    • For Australian citizens: valid Australian passport (photo identification page) only; or Australian citizenship/birth certificate accompanied by a driver’s licence
    • For Australian permanent residents: Australian permanent residence visa label, accompanied by a valid overseas passport
  • Tax File Number
  • Superannuation Choice form
  • Shield GEO CIF
Tax Registration Requirements ?

The employee is required to register for a Tax File Number (TFN). This can be done through myGov portal. Foreign passport holders in Australia who are holders of a visa with work rights can apply for a TFN online here.

Social Security Registration ?

Australia does not have ‘Social Security’ as such but it does have welfare and public healthcare services which are primarily funded by taxpayers. A 2% Medicare levy applies to taxable income and is withheld via payroll under PAYG (Pay As You Go).

Documentation Required for New Employees ?

Minimum employment conditions, for employees in the national workplace relations system, are covered by the National Employment Standards (NES). Further conditions can be set by awards, agreements, and other industrial instruments.

Tax Figures

Information Explanation
Corporate Income Tax ?

Companies in Australia are generally taxed at a rate of 30% of their net income. This includes corporate limited partnerships, strata title bodies corporate, trustees of corporate unit trusts and public trading trusts.

Businesses with an annual turnover of less than $50 million are subject to a 27.5% tax on income.

Income Tax Rate ?
Grossed income Tax Rate (%)
0 – 18,200 0
18,201 – 37,000 19
37,001 – 90,000 32.5
90,001 – 180,000 37
180,001+ 45

A Medicare levy of 2% on taxable income also applies to most residents.

An additional Medicare levy surcharge of 1% to 1.5% on taxable income is levied on individuals with taxable income equal to or exceeding $90,000 who do not have private health insurance. 

Income earners with a taxable income of $37,000 or less are entitled to a low income tax offset of $445. This amount is reduced by 1.5 cents for every dollar over $37,000.

Payroll Tax ?

Payroll tax rates and thresholds in Australia differ between states and territories. If a company meets the minimum threshold it is held to the following rate:

ACT – 6.85%

New South Wales – 5.45%

Northern Territory – 5.50%

Queensland – 4.75%

South Australia – 4.95%

Tasmania – 6.1%

Victoria – 4.85%

Western Australia – 5.5%

Sales Tax ?

The government levies Goods and Services Tax (GST) at a rate of 10% on most goods and services. Some goods and services are GST-exempt such as food (with some exceptions), exports, and most health, medical and educational supplies.

Withholding Tax ?

Dividends – 30%

Interest – 10% (for non-residents) or marginal income tax rates (for residents)

Royalties –  30% (for non-residents) or marginal income tax rates (for residents)

Other Tax ?

There are no state or municipal taxes on income in Australia.

Income Tax (Personal Allowance) ?

The tax-free threshold in Australia is AUD18,200.

Tax Year End Date ?

30 June

Tax Year End Documents ?
  • Payment summary with salary and deductions
  • PAYG summary or Group Certificate*

*From 2018, Group Certificates are being phased out and ‘Single Touch Payroll’ is being introduced which allows employees to view their  tax and payroll information via the myGov portal.

Are tax residents subject to tax on their global income ?

Tax residents are taxed on their global income.

Time to prepare and Pay Taxes ?

105 hours

Time required to start a Business ?

2.5 days

Payments

Information Explanation
Standard Payroll Cycle ?

Monthly

Standard Payment Date Per Month ?

The standard payment date is the 28th of every month.

Payment Mode ?

The majority of payments are made via bank transfer.

Frequency of Salary Payment ?

The most common pay cycles are 12, 26 and 52. 4-weekly or 24 pay periods a year are extremely rare.

Invoice / Payslips required ?

Payslips are required and must be provided within 1 working day of wages being paid. They may be provided electronically.

Minimum Wage ?

The national minimum wage is currently $18.93 per hours or $719.20 per 38-hour work week (as at 4 February 2019).

Each state has its own minimum wage. Employees paid under Industrial Awards have their own minimum wage based on the type of work they do, as classified by the Award.

Immigration and Work Permits in Australia

Foreign workers are required to have the proper visas and work permits in Australia, as established by immigration laws.  To secure a visa for an employee, a company will generally first need to apply to be an 'standard business sponsor' through the Department of Home Affairs. The types of documents required for this process can be a problem for companies just entering the Australian market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

The most common skilled visa used within Australia is the Temporary Skill Shortage Visa (subclass 482). This visa allows skilled workers to come to Australia and work for an approved Australian business for up to four years. Workers who have been on the TSS visa for 2 years or more have increased access to applying for permanent residence visas (described in the table below).

There are some streamlined processing arrangements in place to help executives, managers and specialists who are coming to Australia as part of an intra-company transfer. These are especially targeted to assisting in transfers between Asia Pacific Economic Co-Operation (APEC) economies.

Have your own Company?

The process for obtaining a TSS visa can take from 1 to 3 month. It is highly recommended to utilise an Australian Immigration specialist to assist with the application and processing. If an employer is already authorised to employ overseas workers the waiting period is significantly reduced.

The process for obtaining the TSS visa is as follows:

Part 1: Sponsorship Application (Employer)

Step 1: Sponsorship Application (Employer)

The employer applies to be a ‘sponsor’.

To be eligible, the employer must:

  • Have a legally established and currently operating business (inside or outside Australia)
  • Have no adverse information regarding their business which affects their suitability as a sponsor
  • Have a strong record of, or a demonstrated commitment to employing local labour (in Australia)
  • Declare that they will not engage in discriminatory recruitment practices

The documents required include:

  • Proof of legal establishment (e.g. an Australian Business Number registration certificate for Australian-based employers)
  • Proof of current operation (e.g. profit and loss statements, tax returns for the most recently concluded financial year etc.)
  • Written attestation of a strong record of, or commitment to employing local labour
  • Declaration of refusal to engage in discriminatory recruitment practices

The exact documents required from an employer depends on the country in which the business operates, and the size of the business. More details can be found on the Department of Home Affairs website.

The application can be made online by setting up an ImmiAccount here. It involves completing an online application form, attaching the required documents, paying an application fee and recording a Transaction Reference Number (TRN).

Step 2: Sponsorship Approval and Nomination (Employer)

Once the sponsorship application has been approved, the employer can nominate the employee to work in Australia.

Part 2: Visa Application (Employee)

Step 1: Before Applying

Prior to applying, the employee is required to:

The specific requirements for each component can be found by following the links.

Step 2: Prepare Documents

The employee prepares the following documents:

  • Passport
  • Proof of name change (if applicable) e.g. marriage/divorce certificate, document that shows other names you have been known by
  • Skills assessment reference number (from Trades Recognition Australia)
  • Qualification certificates (professional and educational)
  • Registration, licence or professional membership (if required)
  • References from previous employer(s) on the employer’s letterhead
  • CV which demonstrates full employment and educational history, dates and positions held, name, title and contact details of referees, and that you meet the 2 years of work experience requirement
  • Document(s) indicating sufficient English language skills
  • Australian police certificate (if the employee has spent a total of 12 or more months in Australia in the last 10 years since turning 16) issued by the Australian Federal Police
  • An overseas police certificate from every country where the employee has spent a total of 12 months or more in the last 10 years since turning 16
  • Military service records or discharge papers if they have served in the armed forces of any country

Further documents are required for the employee’s partner, dependants under 18, dependants over 18 and children. These can be found here.

Step 3: Visa Application

The employee applies for the visa online in ImmiAccount. An ImmiAccount can be created here. The application process will include filling the application form, attaching the required documents, paying the application fees, and recording the Transaction Reference Number (TRN).

Step 4: Visa Outcome

Once the Department of Home Affairs has approved the employer’s nomination, they decide on the employee’s application.

The employee is notified in writing of the following information:

  • Visa grant number
  • Starting date of visa
  • Visa conditions

If the visa is refused, the applicant is notified in writing with reasons for refusal and whether they have a right to have the decision reviewed.

Step 5: Enter Australia

Once the visa has been granted, the employee may enter Australia.

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process.

The main work visa for Australia is called the TSS visa. To obtain a TSS the employee must be partaking in an ‘eligible occupation’. A list of eligible occupations can be found here. The employer provides Shield with the employee’s job description, job title and CV to make this assessment.

After eligibility is confirmed, the employee’s personal documents which generally include professional and educational qualifications, a copy of their passport and other identity documents are collected. Depending on the employee’s nationality and circumstances, they may need to show they meet the minimum English language requirements. An application is lodged. The employee needs to obtain private medical insurance in Australia (available online).

After approval the employee can enter Australia. The actual visa is issued and recorded electronically (it can be checked using the Visa Entitlement Verification Online or VEVO service). This means that upon arrival in Australia, the migration officials already have a record that the employee has an approved TSS visa.

Total processing time is at least 1 month.

Types of visas in Australia

Category Description of Visa
Temporary Work (Skilled) Visa (Subclass 457)

The Temporary Skill Shortage Visa (subclass 482) is for skilled workers wishing to work in Australia on a temporary basis. With a TSS Visa, the employee can work in Australia for up to 4 years for their sponsor, study (without government assistance) and travel to and from Australia as many times as they wish while the visa is valid.

Processing for this application generally takes 1-3 months and costs start at $1,175.

Skilled Independent Visa (Subclass 189)

This is a points-tested, permanent residence visa for skilled workers who are not sponsored by an employer or family member or nominated by a state or territory government. To receive an invitation to apply, an expression of interest must be submitted through SkillSelect.

Employer Nomination Scheme (Subclass 186)

This permanent residence visa is for skilled workers. Application can be made through the temporary residence transition stream (for 457 visa holders), the direct entry stream or the agreement stream.

Regional Sponsored Migration Scheme (Subclass 187)

This is an employer sponsored permanent residence visa for working in regional Australia. Application can be made through the temporary residence transition stream (for 457 visa holders), the direct entry stream or the agreement stream.

Business Innovation and Investment (Provisional) Visa (Subclass 188)

A visa for those who want to own and manage a new or existing business in Australia, or want to invest in the country. Applications can be made through the business innovation stream, investor stream, significant investor stream or premium investor stream.

Setting up a company in Australia

When setting up a company you may want to consider these factors:

  1. Business factors

    Some examples would be:

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships
  2. Regional factors

    Separate states and territories are still relatively self-governed bodies, so each may have different rules, costs and availability for certain matters. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. ASIC Price changes

    The Australian Securities and Investment Commission (ASIC) prices will increase on 1 July 2015. As the guide has been written only a month before this, we have pre-emptively used the new prices. However if you read this guide before 1 July 2015, keep in mind current and older sources you find online may show different, older prices.

  4. State investment incentives

    The states in Australia are able to actively compete against each other to attract new foreign investment. This means that incentives such as grants, loans, tax reductions, and the like may vary from state to state, and thus can be a factor when identifying a suitable location in Australia.

This article provides a general guideline for foreign businesses on entering Australia for business purposes. In particular it looks at common pathways to establishing a business presence in Australia, generally through a representative office, branch office or subsidiary company (or local equivalents). In addition various economic, tax and regulatory facts are provided throughout as a source of useful information to assist those who will enter the Australian economy. The guide also looks at some immigration requirements such as obtaining the appropriate visa status.

Data is based on the time of writing this article, February 2019, or closest available dates.

Australia is a continent and nation located in the Oceanic region. It operates under a constitutional monarchy (due to its British colonial and penal heritage) and comprises six states and several territories. Australia is the world’s 13th-largest economy, boasting a high standard of living and minimum income. The country’s legal system is a common law system, and while it has naturally diverged from the UK over the last few centuries, the underlying principles of common law are reflected in Australia.

Population: 24,598,933

Currency: Australian Dollar (AUD)

National Language: English

Federal Capital: Canberra (Australian Capital Territory)

Time zone: UTC+8:00 – UTC+10:00

Calling code: +61

Nominal GDP: USD1.323 trillion (USD53,800 per capita)

Domain: .au

States are self-governing and separate jurisdictions to a degree, but federal laws passed by the Parliament apply to the whole of Australia. Perhaps due to the smaller number of regions (compared to say, the U.S.), many of Australia’s major laws are unified, such as tax, trade and employment laws. This was done with the aim of simplifying cross-border trade and in principle, should make facilitate both local and foreign business activities. For example, registration of a company, business name and trademark in any state or territory will apply across all other states and territories. Registering companies and businesses is relatively straightforward in Australia, and the World Bank Doing Business project has assigned Australia the rank of number 7 in the world.

There are three types of business forms available to foreign companies in Australia.  Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and payroll rules.  In most cases it will depend on the degree of commitment a company has to Australia and the planned business activity.

In Australia the three typical forms of corporation:

  • Company (proprietary or public)
  • Branch office
  • Representative office

Proprietary Company (Subsidiary)

A subsidiary company can be established through incorporation of a new company (although acquiring an existing company or ‘shelf company’ is a common pathway also).

According to the PwC Guide to Business in Australia, a subsidiary may not have more than 50 non-employee shareholders and must have the words “Proprietary Limited” or “Pty Ltd” in its name if it is a limited proprietary (private) company.

The report “Investing in Asia Pacific 2015: Australia“ by Tax advisory Crowe Horwath reports there is no limit on the percentage of foreign ownership. However, the company must also have a registered office in Australia (a postal address alone will not satisfy the requirement), a secretary and at least one Australian resident as a director.

According to the PwC Guide to Business in Australia, upon winding up of the company, liability of shareholders is limited to any amount unpaid on their shares (if any).

The Practical Law guide states there are no minimum share capital requirements for company formation, as long as something is invested, i.e. a share capital of AUD$1 is enough for company registration. In regards to financial reporting, a company only needs to lodge the accounts for the local subsidiary with the Australian Securities and Investments Commission (ASIC), and doesn’t need to share any of the parent company’s financial reports.

Advantage / Disadvantages

A company is a separate legal entity from the directors and any overseas parent company, as well as providing limited liability to its shareholders.

According to ASIC, a company can conduct business throughout Australia without needing to register in individual states and territories.

The tax guide site Lowtax.net writes that since both subsidiaries and branch offices are subject to the standard corporate tax rate, the subsidiary is a preferred choice as it has the added benefits of limited liability and separate legal status from its parent.

However, being a more formal structure, the bookkeeping and financial obligations are much more complex for companies. Franked dividends from an Australian subsidiary are also not subject to withholding tax when paid to the foreign parent company.

Registration Steps

1. Choose a Company Name

When registering a company (as detailed in the next step), a company name can be nominated. A company name is optional – if no company name is to be used, the ACN will be used in place of the name.

However, if you do wish to nominate a company name, it must meet certain requirements. In particular, it is considered your responsibility to ensure the name will not cause any conflicts. Even if ASIC accepts a proposed company name, any company with a similar registered name may take action against you if they feel your name is too similar or could mislead consumers. Therefore, if wishing to use a company name, it is recommended to follow this step prior to registration.

ASIC provides a few tips when considering company names:

  • Naturally, it must be a name that is not already registered to another company or business. You can use Check Name Availability to confirm whether the name is available.
  • In Australia, a company name or business name is not automatically considered a trademark, therefore it is additionally recommended to check if your proposed company name is similar or identical to any registered or pending trademarks. You can check the IP Australia website to find out.
  • A proprietary company must include the word ‘Proprietary’ or the abbreviation ‘Pty’ in its name and must also indicate the liability of its members.
  • You also cannot use words suggesting a misleading connection with government, the Royal Family or names considered offensive or suggesting illegal activity. These restrictions are to make sure a company’s name does not mislead people about its activities.

Time: Instant (online)

Cost: No charge

2. Appoint a Representative

While there is no limitation on foreign ownership, at least one director must be a resident. Therefore if no local director is already nominated, it may be necessary to ‘appoint’ a local representative. Generally the director must be authorized as a representative that can accept legal notices served on the company.

While not a formal registration, a valid person must be agreed upon by the company and the representative’s details will be included in company application.

Time: N/A

Cost: N/A

3. Submit Company Registration Form

You can register an Australian company through a number of business service providers who use software that deals directly with ASIC. Alternatively, if you wish to register directly through ASIC, you can submit Form 201 “Application for Registration as an Australian Company”. The form can be obtained online at http://www.asic.gov.au/regulatory-resources/forms/forms-folder/201-application-for-registration-as-an-australian-company/

The form cannot be submitted online and must be mailed with the application fee to:

Australian Securities and Investments Commission, PO Box 4000, Gippsland Mail Centre, VIC 3841.

When the application is successfully processed, ASIC will register the company, and within two days of this registration ASIC will assign an ACN and issue a Certificate of Registration.

According to ASIC, the ACN is the ‘corporate key’ which can be used to view company records, lodge forms and receive annual statements online. It must also be included on public documents like advertisements, orders and invoices, and included on any official forms lodged to ASIC when changing or updating company details.

Time: 3-4 days

Cost: AUD $457

4.  Apply for an Tax File Number (TFN) and Australian Business Number (ABN)

A company will need a Tax File Number (TFN). You can apply for a business TFN when you register for an ABN.

Once you have an ACN you can also apply for an Australian Business Number (ABN), similar to the ACN it is a unique identifying number which can be used when dealing with official paperwork.  According to comparative site DifferenceBetween.net the ABN is usually 11 digits long, and for companies an ABN generally contains the company’s 9-digit ACN within its 11 digits. So long as the ABN contains the ACN it can be used for official paperwork in place of the ABN.

While the TFN is clearly required, the need (or any benefit) to having both an ACN and ABN may not be obvious – both have the same purpose of ‘streamlining communication with government agencies’ and seem to serve essentially the same function. However, if a company wishes to register one or more business names for trading or branding purposes, or register for the GST, an ABN will be required (business names are optional, but note that any company or business with an annual turnover of AUD$75,000 or more must register for GST and thus by extension, an ABN).

According to the Australian Business Register (ABR), the Australian Taxation Office (ATO) is the authority responsible for assigning ABNs for companies and businesses in Australia. You will need to provide your company documents, and details such as the place of business, the authorized contact (e.g. resident director) and a written declaration stating that the information provided is true and correct.

The application can be done online at the Australian Business Register: https://abr.gov.au/ABRWeb/AbnApply.abr?pid=71.

It can also be done via the Australian Tax Office, by posting a Form NAT 2938 – ABN registration for individuals/sole traders or Form NAT 2939 – ABN registration for companies, partnerships, trusts and other organizations). The form can be ordered from the ATO at: https://www.ato.gov.au/General/Gen/Order-ATO-products-online/

Note: the ABR states that when you register for a TFN/ABN online you can also register for the GST and a business name at the same time.

Time: Instant (online)

Cost: No charge

5.  Register a business name (optional)

In addition to a company name, a company may choose to register one or more “business names”. ASIC describes a business name as a trading name that can be used if a company wants to carry on a business using its name without the legal terms, or if it wants to use a different name for branding purposes, etc. Note if a company wishes to register business names, it must first acquire an ABN (as discussed above). Multiple business names can be attached to a single ABN.

Business names can be registered through a service provider, or can be directly registered via the Australian Business Register. You will need to provide the ABN, and details of the proposed ‘business’ such as business address and name of the business holder (which can be the company or an individual).

The name can be registered online through ASIC at https://asicconnect.asic.gov.au/login/login.html

Time: Instant (online)

Cost: AUD $34 for one year (AUD $78 for three years)

6.  Register for GST with the Australian Taxation Office (ATO)

It is not necessary for an entity that has an ABN to be registered for GST if their annual turnover or income does not exceed $75,000.00.

Time: Instant (online)

Cost: No charge

7. Register any business names as trade marks (optional)

Registering a trading or business name allows you to carry on business under the name, but doesn’t give you any exclusive trading, branding or ownership rights over that name. As stated by IP Australia, registering a business or company name does not automatically have the right to use that name as a trade mark. Registering a business name or company name that is similar or has potential to be confused with a protected trade mark could cause legal issues. Hence it is recommended to check the availability of planned company/business names from the start against both existing business names and trademarks (as detailed in the first step).

For that level of protection of a trademark, the company/business name may additionally be registered as a trademark. Although the specifics of Australian trade mark law is outside the scope of this guide, the basic procedure is to register online through IP Australia’s eServices system at https://services.ipaustralia.gov.au/ICMWebUI/

Time: 3-4 months

Cost: starting from AUD $120

8.  Establish an Office

In Australia, renting ‘virtual offices’ is generally not sufficient to meet legal requirements of establishing a company, and a real physical office location will be required. Commercial premises can be leased through any number of private agencies or landlords.

The Australian Tax Office notes that if you rent a commercial property as your business premises, the rent is tax deductible and you may be able to claim GST credits for the GST included in the rent if the company is registered for GST.

Time: depends on agent (estimate: 1-2 weeks for paperwork)

Cost: varies

9.  Open a Commercial Bank Account

If you’re operating a partnership, company or a trust, you must have a separate bank account for the company for tax purposes.

Opening a business account is generally straightforward in Australia, and doesn’t have particular restrictions or requirements. Most of the major banks offer a quick and easy online registration process, or simply going to a bank in person, where an account can usually be opened on the same day.

Time: Generally instant (online)

Cost: Generally no charge (may require minimum initial deposit)

10.  Register for Payroll Tax

Companies employing people must register with the local revenue office when their Australia-wide wages exceed the threshold applicable in that state or territory. The Payroll Tax is a tax based on total wages per month, and is controlled at the state level, collected in each state or territory that staff are located in. Companies are only liable for payroll tax if the total wages exceed an exemption threshold per each state. The state bodies and applicable thresholds (as of June 2015) are listed on the government payroll website:

It is unfortunately difficult to give any specific guidelines on the process, price and timeframes of registering for Payroll Tax since, as Safe Work Australia reports, it can vary greatly between states.

Time: 1 week-2 weeks (rough estimation)

Cost: depends upon state

11.  Signup for Workers Compensation

If employing people, the company is obligated to maintain a current accident and sickness insurance, generally referred to as “Workers’ Compensation Insurance”. Law firm Henry Carus Associates states that although there is a federal agency overseeing the standards and laws are, for the most part, unified across all states, the actual operation of Workers’ Compensation is on a state level, each with its own rules and systems. Companies can register as an employer with the appropriate local state authority, usually named “WorkCover” or “WorkSafe”:

  • Australian Capital Territory – Work Safe Act
  • New South Wales – Work Cover NSW
  • Northern Territory – NT Work Safe
  • Queensland – The Workers’ Compensation Regulator (formerly Q-COMP)
  • South Australia – ReturnToWork SA (from 1st July 2015)
  • Tasmania – WorkCover Tasmania
  • Victoria – WorkSafe Victoria
  • Western Australia – WorkCover WA

It is unfortunately difficult to give specific guidelines on the process, price and timeframes of registering for Workers’ Compensation as an employer. However, generally, application can be done online or via post, but the specific application process and cost depends on the provider. As Safe Work Australia reports, in some states, the actual insurance is covered by a private insurance company that the company must engage, and only overseen by the Worker’s Compensation body, while sometimes it is covered directly. Generally costs are largely based on an employer’s health and safety performance, and the safety ranking of the industry, for example as reported by the Victoria Worksafe guide.

Time: 1 week (varies greatly depending upon insurer, business type, etc)

Cost: varies greatly depending upon state, insurer, business type, etc

Branch Office

If not wishing to incorporate an Australian Company, a foreign company “carrying on business” in Australia must still register. The process is similar to establishing an Australian company. Once registered, the foreign company may sue and be sued or may hold property in the name of its secretary or other officer.

According to the PwC Guide to Business, if a foreign company chooses to establish a branch office in Australia, it must be registered as a foreign company under the Corporations Act. Law firm Henry Carus Associates states that there is no limit on foreign ownership for branches. However, a registered office needs to be established in Australia and a local agent must also be appointed.

The Practical Law guide states that for regular financial reporting, a company needs to lodge the accounts for the local branch office to the Australian Securities and Investments Commission (ASIC), and also the parent company’s financial reports.

Advantage / Disadvantage

According to the PwC Guide to Business in Australia the establishment of an Australian branch may be preferable to incorporating a subsidiary if one of the objectives is to consolidate the financial results of the company in the place of residence of the overseas company.

According to ASIC, a company can conduct business throughout Australia without needing to register in individual states and territories.

However, the tax guide site Lowtax.net writes that since both subsidiaries and branch offices are subject to the standard corporate tax rate, the subsidiary may be preferable as it has the added benefit separate legal status from its parent.

Registration Steps

1. Check availability of company name

When registering the company (detailed in the next step), a company name can be nominated. A company name is optional – if no company name is to be used, the ACN will be used in place of the name.

However, if you do wish to nominate a company name, it must meet certain requirements. In particular, it is considered your responsibility to ensure the name will not cause any conflicts. Even if ASIC accepts a proposed company name, any company with a similar registered name may take action against you if they feel your name is too similar or could mislead consumers. Therefore if wishing to use a company name, it is recommended to follow this step prior to registration.

ASIC provides a few tips when considering company names:

  • Naturally, it must be a name that is not already registered to another company or business. You can use Check Name Availability to tell you whether your name is identical or similar to an Australian name already registered.
  • In Australia, a company name or business name is not automatically considered a trademark, therefore it is additionally recommended to check if your proposed company name is similar or identical to any registered or pending trademarks. You can check the IP Australia website to find out.
  • A proprietary company must include the word ‘Proprietary’ or the abbreviation ‘Pty’ in its name and must also indicate the liability of its members.
  • You also cannot use words suggesting a misleading connection with government, the Royal Family or an ex-servicemen’s organisation We may also refuse to register certain names if they are considered offensive or suggest illegal activity. These restrictions make sure that a company’s name does not mislead people about its activities.

Time: Instant (online)

Cost: No charge

2.  Appoint a Representative

While there is no limitation on foreign ownership, at least one director must be a resident. Therefore if no local director is already nominated, it may be necessary to ‘appoint’ a local representative. Generally the director must be authorized as a representative that can accept legal notices served on the company.

While not a formal registration, a valid person must agreed upon by the company and the representative’s details will be included in company application.

Time: N/A

Cost: N/A

3.  Lodge Foreign Company forms and Register the company

To register a foreign company, you must complete Form 402 Application for registration as a foreign company. The form asks for general details about the corporation and must be completed in full. In addition, the following documents must be submitted, and if they are not in English then a certified translation is required:

  • Current certificate of registration or a document of similar effect that confirms that the company is currently registered
  • Certified copy of the company’s constitution certified by official body or notary dated no more than 3 months before we receive it.*
  • If the foreign company is not bound by a written constitution and/or is bound by some other means of governance, provide a statement in writing to   that effect and include a description of the legislation that governs the   administration of the company. The statement must be certified in accordance with the requirements for certification as described above.
  • A copy of the document authorizing the third party to appoint the local agent. Verify the authorizing document with a Form 403 – Verification of copy of document authorising on behalf of a foreign company, execution of a document appointing a local agent.
  • Memorandum stating the powers of certain directors

The application and supporting documents, can be mailed to

Australian Securities and Investments Commission, PO Box 4000, Gippsland Mail Centre VIC 3841

ASIC will issue a unique identifying number known as the Australian Registered Body Number (ARBN) and a Certificate of Registration. For the most part this can be used for the same function as an Australian Company Number (ACN).

Time: unspecified

Cost: AUD $463

4.  Apply for an Tax File Number (TFN) and Australian Business Number (ABN)

A foreign company carrying on business in Australia will need a Tax File Number (TFN). According to the Australian Business Register, once you have an ARBN you can also apply for an Australian Business Number (ABN), similar to the ARBN it is a unique identifying number which can be used when dealing with official paperwork.

While the TFN is clearly required, the need (or any benefit) to having both an ARBN and ABN may not be obvious – both have the same purpose of ‘streamlining communication with government agencies’ and seem to serve essentially the same function. However, if a company wishes to register one or more business names for trading or branding purposes, or register for the GST, an ABN will be required (business names are optional, but note that any company or business with an annual turnover of AUD$75,000 or more must register for GST and thus by extension, an ABN).

The Australian Taxation Office (ATO) is the authority responsible for assigning ABNs for companies and businesses in Australia. According to the ABR you will need to provide your company documents, and details such as the place of business, the authorized contact (e.g. resident director) and a written declaration stating that the information provided is true and correct.

The application can be done online at the Australian Business Register: https://abr.gov.au/ABRWeb/AbnApply.abr?pid=71 or the appropriate form can be found online at: https://abr.gov.au/For-Business,-Super-funds—Charities/Applying-for-an-ABN/

It can also be done via the Australian Tax Office, by posting a Form NAT 2938 – ABN registration for individuals/sole traders or Form NAT 2939 – ABN registration for companies, partnerships, trusts and other organizations). The form can be ordered from the ATO at: https://www.ato.gov.au/General/Gen/Order-ATO-products-online/

Note: the ABR states that when you register for a TFN/ABN online you can also register for the GST and a business name at the same time.

Time: Instant (online)

Cost: No charge

5.  Register a business name (optional)

In addition to a company name, a company may choose to register one or more “business names”. ASIC describes a business name as a trading name used if a company wants to carry on a business using its name without the legal terms, or if it wants to use a different name for branding purposes, etc.

Note: if a company wishes to register business names, it must first acquire an ABN (as discussed above). Multiple business names can be attached to a single ABN.

Business names can be registered through a service provider, or can be directly registered via the Australian Business Register. You will need to provide the ABN, and details of the proposed ‘business’ such as business address and name of the business holder (which can be the company or an individual).

The name can be registered online through ASIC at https://asicconnect.asic.gov.au/login/login.html

Time: Instant (online)

Cost: AUD $34 for one year (AUD $78 for three years)

6.  Register for GST with the Australian Taxation Office (ATO)

It is not necessary for an entity that has an ABN to be registered for GST if their annual turnover or income does not exceed $75,000.00.

Time: Instant (online)

Cost: No charge

7.  Register any business names as trade marks (optional)

According to IP Australia, registering a trading or business name allows you to carry on business under the name, but doesn’t give you any exclusive trading, branding or ownership rights over that name. Registering a business or company name does not automatically have the right to use that name as a trademark. Registering a business name or company name that is similar or has potential to be confused with a protected trade mark could cause legal issues. Hence it is recommended to check the availability of planned company/business names from the start against both existing business names and trademarks (as detailed in the first step).

For that level of protection of a trademark, the company/business name may additionally be registered as a trademark. Although the specifics of Australian trade mark law is outside the scope of this guide, the basic procedure is to register online through IP Australia’s eServices system at https://services.ipaustralia.gov.au/ICMWebUI/

Time: 3-4 months

Cost: starting from AUD $120

8.  Establish an Office

In Australia, renting ‘virtual offices’ is generally not sufficient to meet legal requirements of establishing a company, and a real physical office location will be required. Commercial premises can be leased through any number of private agencies or landlords.

The Australian Tax Office notes if you rent a commercial property as your business premises, the rent is tax deductible and you may be able to claim GST credits for the GST included in the rent if the company is registered for GST.

Time: depends on agent, estimate 1-2 weeks for paperwork

Cost: varies

9.  Open a Commercial Bank Account

If you’re operating a partnership, company or a trust, you must have a separate bank account for the company for tax purposes.

Opening a business account is generally straightforward in Australia, and doesn’t have particular restrictions or requirements. Most of the major banks offer a quick and easy online registration process, or simply going to a bank in person, where an account can usually be opened on the same day.

Time: Generally instant (online)

Cost: Generally no charge (may require minimum initial deposit)

10.  Register for Payroll Tax

Companies employing people must register with the local revenue office when their Australia-wide wages exceed the threshold applicable in that state or territory. The Payroll Tax is a tax based on total wages per month, and is controlled at the state level, collected in each state or territory that staff are located in. Companies are only liable for payroll tax if the total wages exceed an exemption threshold per each state. The state bodies and applicable thresholds (as of June 2015) are listed on the government payroll website:

It is unfortunately difficult to give any specific guidelines on the process, price and timeframes of registering for Payroll Tax since it can vary greatly between states.

Time: 1 week-2 weeks (rough estimation)

Cost: depends upon state

11.  Sign up for Worker Compensation Insurance

If employing people, the company is obligated to maintain a current accident and sickness insurance, generally referred to as “Workers’ Compensation Insurance”. Law firm Henry Carus Associates states that although there is a federal agency overseeing the standards and laws are, for the most part, unified across all states, the actual operation of Workers’ Compensation is on a state level, each with its own rules and systems. Companies can register as an employer with the appropriate local state authority, usually named “WorkCover” or “WorkSafe”:

  • Australian Capital Territory – Work Safe Act
  • New South Wales – Work Cover NSW
  • Northern Territory – NT Work Safe
  • Queensland – The Workers’ Compensation Regulator (formerly Q-COMP)
  • South Australia – ReturnToWork SA (from 1st July 2015)
  • Tasmania – WorkCover Tasmania
  • Victoria – WorkSafe Victoria
  • Western Australia – WorkCover WA

It is unfortunately difficult to give specific guidelines on the process, price and timeframes of registering for Workers’ Compensation as an employer. However, generally, application can be done online or via post, but the specific application process and cost depends on the provider. As Safe Work Australia reports, in some states, the actual insurance is covered by a private insurance company that the company must engage, and only overseen by the Worker’s Compensation body, while sometimes it is covered directly. Generally costs are largely based on an employer’s health and safety performance, and the safety ranking of the industry, for example as reported by the Victoria Worksafe guide.

Time: 1 week (varies greatly depending upon insurer, business type, etc)

Cost: varies greatly depending upon state, insurer, business type, etc 

Representative Office

Where a foreign company does not intend to carry on business in Australia it may seek to establish a representative office. Such an office must however only engage in activities which will not amount to carrying on business (for example, undertaking promotional activities). PwC’s business guide states that if the representative office engages in activities that count as “carrying on business”, an Australian branch must be registered.

The representative office requires a minimum of 1 director or officer, who must be a natural person (i.e. not another company) and a resident in Australia. It may have additional directors who may be from any legal jurisdiction.  The primary example of a representative office is having a nominated person who handles local enquiries. The person may be employed by a local affiliate and authorized to act as an official point of contact for the parent company. The name of representative office will be the name of the parent company. Consulting Firm Five Consult notes that company names containing restricted words such as “Bank”, “Insurance”, “Trust” etc. will not be permitted however, unless appropriate approval has been obtained from the government.

Advantages/Disadvantages

A representative office is generally useful for companies wishing to establish a preliminary presence in a country prior to operational establishment. It can be useful as an information point for local customers or to establish a presence and perform preliminary actions like market research, networking, preparing for incorporation of a subsidiary, and the like. The primary restriction on a representative office is also its main disadvantage. As mentioned above, a representative office may only engage in activities that are not considered ‘carrying on business’ in Australia. In general, this means any direct profit-generating activities such as making sales.

The other major point to keep in mind is that because the representative office is not considered a legal entity the appointed director will act as the representative agent for the parent company. This means that they will be the one liable for any agreements made in Australia (such as real estate contracts). This also seems to mean that a representative office cannot retain staff as an Australian employer.

Registration Steps

Much less information about representative offices is available. Generally, it is mentioned along with the branch office form, but then only details of a branch office registration are discussed with representative offices being more of a footnote. It seems the only real formal requirement is to appoint a representative. This suggests that a representative office cannot directly employ people in Australia, and that a representative office would be a very limited form.

1.  Appoint a Representative

The representative office requires a local resident to act as a director responsible to local authorities. Additional directors can also be appointed, and these additional directors are free to be based overseas.

Five Consult reports that to report the representative operation, a Register of Directors must be submitted to ASIC.

Time: N/A

Cost: N/A

2.  Establish an Office

In Australia, renting ‘virtual offices’ is generally not sufficient to meet legal requirements of establishing a company, and a real physical office location will be required. Commercial premises can be leased through any number of private agencies or landlords.

The Australian Tax Office notes if you rent a commercial property as your business premises, the rent is tax deductible and you may be able to claim GST credits for the GST included in the rent if the company is registered for GST.
Note that the representative will ultimately be the one who is accountable for the lease.

Time: depends on agent, estimate 1-2 weeks for paperwork

Cost: varies

3.  Open a Commercial Bank Account

If you’re operating a partnership, company or a trust, you must have a separate bank account for the company for tax purposes.

Opening a business account is generally straightforward in Australia, and doesn’t have particular restrictions or requirements. Most of the major banks offer a quick and easy online registration process, or simply going to a bank in person, where an account can usually be opened on the same day.

Note that for a representative office, the representative will likely be the one who is responsible for opening the account.

Time: Generally instant (online)

Cost: Generally no charge (may require minimum initial deposit)

In Australia, there is little difference between the branch and subsidiary. While the subsidiary may take a bit more work to register and manage, it is a separate legal entity and this means the parent company’s records and liabilities can be better protected. Representative offices appear to be little documented, except for banks and international financial organizations. Therefore, the subsidiary company generally appears to be the most common structure for foreign businesses entering Australia.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Australia, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Australia they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment Australia
  • the company needs help with tax, employment, immigration and payroll compliance in Australia

The complexity of employment regulations in Australia makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Australia allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Australia.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Australia. Read more about outsourced employment through Shield GEO.

Summary of Set Up Steps

  Rep. Office Branch Office Subsidiary Company Time Cost (AUD)
Check Availability of Name No Yes Yes Instant 0
Appoint a representative Yes Yes Yes N/A N/A
Register Company (ACN/ARBN) No Yes Yes 3-4 days 457
Apply for Tax File Number (TFN) and Australian Business Number (ABN) No Yes Yes Instant 0
Register business names No optional optional Instant 34
Register for Goods & Services Tax (GST) No Yes Yes 1 day 0
Register name as trade mark No optional optional 2-4 months 120+
Establish Office No Yes Yes N/A N/A
Open Corporate Bank Account No Yes Yes Instant 0
Register for Payroll Tax No Yes Yes 1-2 weeks Varies
Register for Workers Compensation Insurance No Yes Yes Varies Varies
TOTALS:*applications and processing times, not including internal document preparation, etc

Rep.0 days

No cost

Branch1-2 weeks

$457-

$607+

Subsidiary1-2 weeks

$457-

$607+

   

Add an additional 2-4 months if registering trade marks. However, the business can register and commence without waiting for the trademarks.

  • Australia Employer of Record Overview

Australia Employer of Record Overview

  • Australia Employer of Record Overview

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