Guides

Doing Business in Australia

Doing Business in Australia

Australia is a large, culturally diverse nation that offers many business advantages to growth-minded companies. Low unemployment, robust exports and a stable financial system are just some of the qualities that make Australia a top choice for business owners. The country is one of the wealthiest in the world, sustaining trade ties with many countries in the Asia-Pacific region.

Australia is the world’s eighth top economy in terms of foreign direct investment inflows as of 2018, according to the UNCTAD (United Nations Conference on Trade and Development) World Investment Report 2019. Few barriers to entry, a variety of legal and corporate frameworks, and an accommodating business culture make this country attractive to businesses looking to expand.

However, before you begin the expansion process to this jurisdiction, there are several aspects to consider both to ensure a fit with the business environment and to guarantee you meet the compliance requirements.

Download our country guide to learn more about this region’s business environment, entity types, taxes, incorporation requirements, and more.

Advantages for Doing Business in Australia

Business-friendly environment

Many businesses favor Australia because of the ease of doing business there. The World Bank Doing Business guide ranked the country 7th for starting a business. The registration process for a new business is simple and involves only three steps. The first is to complete and submit an Australian Securities and Investment Commission Form 201 titled “Application for Registration as an Australian Company.” Another step involves obtaining a certificate of incorporation and an Australian company number, also known as an ACN.

A business must also register for an Australian business number with the Australian Taxation Office and sign up for workers’ compensation insurance at an insurance agency. The average time for completing these steps is about three days.

Supportive Governance

Australia is considered a prime destination for expansion due to the fact that the government fosters a welcoming environment for business. A vigorous regulatory landscape exists, and at the same time, the country ranks as one of the world’s most business-friendly nations.

Australia is recognized for its stability, which includes banks, the legal system and corporate debt. The region has achieved a “Triple A” credit rating from all three top credit bureaus (S&P, Moody's and Fitch), which positions it as a low-risk economy. The stock market in the region is known for its efficiency, and the country’s finance and banking regulations are some of the most stringent in the world.

Deep Ties to the Asia-Pacific Region

Australia is well situated near the important Asia-Pacific markets, positioning businesses well to reap the benefits of trade. The country’s trade, investment and culture links with countries in the Asia-Pacific region are long-standing and deeply rooted.

Important trade agreements are in place with vital markets, including China, Japan, South Korea, New Zealand, Singapore, the United States, Thailand, Malaysia and the Association of Southeast Asian Nations (ASEAN).

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is in force for businesses that desire easy trading within the region. After full implementation, 11 countries are aligned, which allows businesses to reach 495 million consumers.

These legally binding trade agreements are critically important, as they guarantee privileged access to the markets of trading partners for goods, services and investments. The interdependence of Australia and other major Asia-Pacific markets is emphasized by the fact that 12 of Australia’s top 13 trading partners are located within the region.

Dynamic Industries

Companies doing business in Australia have achieved success in many industries, including energy and resources, education, tourism, financial services, and agribusiness. The country is evolving to support disruptive technology sectors in the spaces of health care, financial services, agriculture, education and more.

Australian products and food maintain a strong position in the market and are in high demand worldwide, as are services in the areas of tourism, education, health care and professional management.

Intellectual Property Protection

Intellectual property rights are a key consideration for growth-minded businesses looking to expand into new regions. IP protection in Australia is strong and extends to a wide variety of areas, including trademarks, designs, patents, copyrights and plant breeders’ rights.

Protection extends to confidential information and trade secrets and there are safeguards against people unlawfully passing off goods or services as their own.

The country participates in the World Trade Organization’s agreement on trade-related aspects of intellectual property rights and is party to multinational treaties that are administered by the World Intellectual Property Organization.

Challenges for Doing Business in Australia

Market Concentration

Due to Australia’s small population and distance from other players in the world, market concentration exists in some industries with certain sectors being dominated by a few large firms. American companies moving into this market may face competition with long-established brands that have already developed a strong reputation and relationships with key suppliers.

Foreign investment in some sectors has also reduced competition, which could limit potential returns for businesses entering these spaces.

Check out our country guide for key facts on entity types and start your expansion off on the right foot.

Trading across Borders

Trading across borders in Australia is a challenge. The country ranks 103 for trading across borders in the World Bank Doing Business 2019 report. This ranking is based on the time and expense associated with logistics of exporting and importing goods.

Logistics is the largest cost item in the production of many agricultural industries and can account for as much as 48.5% of farm-gate costs, according to a report published by AgriFutures Australia.

A lack of digitalization in the logistics space contributes to these challenges, which manifests in inefficient and outdated practices along the supply chain.

Variable Weather

Australia’s weather can oscillate wildly, which can have an effect on business. The climate varies by region, partially due to the country’s vast area, and there are frequent droughts that last several seasons.

The country also has low annual average rainfall in some areas, and seasons are opposite those found in the Northern Hemisphere.

Transportation

Large distances exist between city production centers and areas providing raw materials, resulting in high transportation costs. Businesses expanding to this region can expect that transportation expenses will take up a large portion of manufacturing and distribution budgets.

Because of the importance of moving goods quickly—and the expense of using airfreight across Australia’s massive spaces—the country has made heavy investments in its road networks.

Conclusion

Acquiring enough local knowledge to successfully operate in a new country can take years. This interval can be greatly shortened by partnering with experts who have deep knowledge of local laws and regulations. This is doubly important when it comes to the more challenging aspects of expanding operations in a foreign region.

To learn more about how CT can help you better manage your global compliance needs, contact a CT representative at (855) 444-5358 (toll-free in the U.S.).

 

Frequently Asked Questions about Doing Business in Australia

Why should I consider doing business in Australia?

Australia is a large, geographically and culturally diverse nation with many business advantages. The country is the world’s eighth top economy in terms of FDI inflows and ranked number 7 by the World Bank for starting a business. Stable fiscal management, steady population growth and close ties with fast-expanding Asian markets make Australia a favorite of expanding American businesses.

What challenges should I consider when expanding to Australia?

Intense local competition exists in some business sectors, which includes long-established brands that have strong supplier relationships. In other sectors, foreign investment has reduced competition and may limit potential returns for businesses entering those spaces.

Trading across borders can also be a challenge, with the country ranking number 103 for trading across borders in the World Bank Doing Business 2019 report. This ranking is based on the time and costs associated with the logistics of exporting and importing goods. CT can help you navigate these challenges and can provide customized solutions for all your needs.

What are the entity types available in Australia, and how can I select the right one?

The main entities are proprietary companies, public companies and branch/representative offices. Selecting the right one depends on your business needs, size, tax goals and more. CT can help guide you through the process. 

What is the local tax rate?

The tax rates range from 27.5% up to 30%, depending on the revenue and structure of the company. Value-added tax rates are 10%, and tax treaties exist with over 40 jurisdictions. Learn more in our country guide.

 

Questions? We can help.

Have a specific question about a product? A CT Specialist will follow up with a custom quote along with a comprehensive assessment of your needs.