Incorporation

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:

• ACT Revenue Office ($145,833.33 per month)http://www.revenue.act.gov.au/duties-and-taxes/payroll-tax
• NSW Office of State Revenue AUD (AUD$14,384 per week.)http://www.osr.nsw.gov.au/taxes/payroll
• Northern Territory Revenue (AUD$125,000 per month)http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/PayrollTax/Pages/default.aspx
• Qld Office of State Revenue (AUD$21,153 per week.)http://www.osr.qld.gov.au/payroll-tax/index.shtml
• Revenue SA (AUD$50,000 per month)http://www.revenuesa.sa.gov.au/taxes-and-duties/payroll-tax/frequently-asked-questions
• TAS State Revenue Office (AUD$19,423 per week.)http://www.sro.tas.gov.au/domino/dtf/SROWebsite.nsf/v-all/7B06C3D928B7F834CA257574008351E8?OpenDocument&menuitem=Payroll Tax
• VIC State Revenue Office (AUD$45 833 per month)http://www.sro.vic.gov.au/SRO/sronav.nsf/childdocs/-34FAD0EFBAFF8BE0CA2575A100442101-5DB4C6346AF77ABBCA2575D10080B1F7?open
• WA Office of State Revenue (AUD$66 667 per month)

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

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:

• ACT Revenue Office ($145,833.33 per month) http://www.revenue.act.gov.au/duties-and-taxes/payroll-tax
• NSW Office of State Revenue AUD (AUD$14,384 per week.) http://www.osr.nsw.gov.au/taxes/payroll
• Northern Territory Revenue (AUD$125,000 per month) http://www.treasury.nt.gov.au/TaxesRoyaltiesAndGrants/PayrollTax/Pages/default.aspx
• Qld Office of State Revenue (AUD$21,153 per week.) http://www.osr.qld.gov.au/payroll-tax/index.shtml
• Revenue SA (AUD$50,000 per month) http://www.revenuesa.sa.gov.au/taxes-and-duties/payroll-tax/frequently-asked-questions
• TAS State Revenue Office (AUD$19,423 per week.) http://www.sro.tas.gov.au/domino/dtf/SROWebsite.nsf/v-all/7B06C3D928B7F834CA257574008351E8?OpenDocument&menuitem=Payroll Tax
• VIC State Revenue Office (AUD$45 833 per month) http://www.sro.vic.gov.au/SRO/sronav.nsf/childdocs/-34FAD0EFBAFF8BE0CA2575A100442101-5DB4C6346AF77ABBCA2575D10080B1F7?open
• WA Office of State Revenue (AUD$66 667 per month)

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 

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.