Australia has maintained its position as a preferred location for international startups who want to operate within a stable innovation-oriented economy. The country provides an attractive environment for international business through its combination of strong legal foundations and intellectual property safeguards and simple business procedures and qualified labour pool for worldwide business establishment. Australia strengthens its position as an attractive business destination through its extensive Asian market connections and dual taxation treaty network and available venture capital.

The positive business setting in Australia conceals a wide-ranging regulatory system that needs precise handling. Every foreign startup owner should handle all regulatory obligations because their failure leads to business interruptions and monetary fines and potential legal controls. Every entrepreneur who wants to operate in Australia needs to know the essential regulatory requirements for both market entry exploration and business expansion from overseas locations.

Choosing the Right Business Structure

Choosing the right legal structure is fundamental to doing business in Australia. Given that the structure will determine its tax treatment, reporting requirements, exposure to liability, ability to raise funds, and acceptance of investors-in-theory, a Proprietary Limited Company stands tall as mostly a foreign company’s workable structure. It is a separate legal entity from its owners, thereby providing limited liability to its owners and some level of credibility from the perspective of clients, investors, and regulators.

Since the Pty Ltd company allows a flexible shareholding structure, it is ideal for capital raising. Likewise, it provides ease for the transfer of ownership or equity participation-an important feature for startups expecting several rounds of funding. Meanwhile, registering a branch office of a foreign company may be easier to establish in the short run but in return, it opens the parent company up to legal liabilities and diminishes its access to local incentives for startups.

For market testing or simply non-commercial representation, some startups choose to establish a representative office, which can be involved in intelligence gathering or relationship building but not business transactions. At AnBac Advisors, we help our clients evaluate these options in accordance with their long-term objectives, compliance exposure and exit strategy.

Company Registration and Key Regulatory Approvals

When the expected structure has been chosen, next comes registration with the Australian Securities and Investments Commission (ASIC), which will issue an Australian Company Number (ACN). The company must also be registered with the Australian Business Register (ABR) to obtain an Australian Business Number (ABN), required in some cases for invoicing and dealing with others. It will also require a Tax File Number (TFN), which is necessary for tax filings under corporate tax laws.

If your business expects to earn income surpassing AUD 75,000 per annum, registration for GST becomes mandatory. GST registration requires periodic lodgement of Business Activity Statements (BAS) to the Australian Taxation Office (ATO). Businesses must also obtain other licenses and permits relevant to their industry. Financial service-related firms may find themselves having to get licensed by ASIC while biotech- or health-related ventures may have to be cleared by the Therapeutic Goods Administration (TGA).

This step deals with naming the company, checking the name availability, and drawing up a constitution or replaceable rules to govern the company. AnBac Advisors deals with the entire registration process and ensures compliance with both federal and nominated state-level requirements.

Foreign Investment Review and Local Director Requirement
Foreign-controlled companies must appoint at least one director ordinarily resident in Australia. This person shall see to it that the company fulfils its duties under Australian law and acts as a liaison for regulatory issues. Sometimes foreign founders may not have an immediate presence of a qualified local director, and in those cases, nominee director services provide a solution. Almost all nominee director services require due diligence given the fiduciary and compliance responsibilities involved.

In addition, Australia maintains control over certain foreign investments through the Foreign Investment Review Board (FIRB). In sectors considered sensitive-real estate, telecommunications, critical infrastructure, and defence, for example-FIRB approval must be secured. Non-obtaining of FIRB clearance, when necessary, can render transactions void and impose penalties.

At AnBac Advisors, we ensure that your nominee director service provided and foreign investment advice comply with the provisions of the Foreign Acquisitions and Takeovers Act and its applicable regulations. We also assist clients in determining whether their sector is subject to notification or approval as well as with the FIRB application preparation and documentation.

Taxation Framework and Incentives for Startups

Australia’s corporate tax regime is simple. There is a flat corporate tax rate of 30%; however, companies that are Base Rate Entities (i.e., companies with a turnover below AUD $50 million, and less than 80% of their gross income as passive income) are taxed at 25%. For resident companies, tax is assessed on worldwide income.

Continuing with non-resident companies, these entities only pay tax if they operate and earn income in Australia from Australian sources.
Start-ups may also benefit from the refundable Research and Development (R&D) Tax Incentive for qualifying and approved R&D activities. Therefore, Australia continues to serve as a quality intermediary for firms hoping to establish overseas operations with an innovation-led business that relates to technology, biotechnology, engineering, and software. Further funding incentives for investors in approved early-stage startups exist in the form of the Early-Stage

Innovation Company (ESIC) classification.

Additionally, other taxes include payroll tax (on a state basis), fringe benefits tax (FBT) on benefits received by employees that are non-cash in that they are benefits in kind), and superannuation contributions, which is currently 11% of the employee’s ordinary time earnings. Making a mistake with payroll or superannuation will not only attract the attention of ATO but fines for being non-compliant as well, which is why it simply makes good sense to implement appropriate financial controls from the outset.

Employment Law, Visas, and Human Resource Compliance

Australia has strict but friendly employee labour laws under the Fair Work Act 2009 which establishes National Employment Standards (NES), which require minimum wages, annual leave, maximum hours and termination. Employers must also abide by modern awards in that apply to industries or occupations, that provide minimum conditions above the NES.

Hiring foreign staff is complicated, and to navigate the Australian immigration system as a business owner, the owner themselves could apply for the Business Innovation and Investment (Subclass 188) visa, the Global Talent Independent Program or the Temporary Skill Shortage (TSS) visa if they want to employ overseas workers in roles that can’t find staff locally.

Australia also has strict WHS (workplace health & safety) laws, anti-discrimination laws and classification of employee (full time, part time or contractor) laws. AnBac Advisors can help first time business owners to set up a compliant HR policy, draft legally compliant employment agreements and manage visa sponsorships as part of a holistic workforce compliance solution.

Ongoing Reporting, Record-Keeping and Governance

Starting a business in Australia is only the beginning; owning and operating a corporation entails long-lasting obligations to keep your business compliant. Some of the most important ongoing obligations include:

• Annual reviews with ASIC and payment of prescribed fees
• Filing Tax returns and BAS statements
• Maintaining financial statements and company registers
• Holding Annual general meetings and recording board minutes

Non-compliance with these corporate and tax obligations can result in penalties, de-registration and disqualification as a director. To avoid these non-compliances, it is advisable for businesses to obtain professional corporate secretarial and compliance management services. Even though AnBac Advisors offers a comprehensive suite of business support services ranging from Registered Office facilities and document lodgement.

We also assist foreign founders with best-practice corporate governance as foreign founders prepare to fund raise, be subject to due diligence or expand into new jurisdictions.

By
Team Anbac Advisors