Home Business & Company Foreign Companies Wanting to Establish in Australia

Foreign Companies Wanting to Establish in Australia

In this article we look at the two most common ways in which foreign companies establish and carry on business in Australia.

Are you a director or shareholder of a foreign company wanting to establish your company’s business in Australia? In this article we look at the two most common ways in which foreign companies establish and carry on business in Australia being:

Establishment of a branch office in Australia; or
Incorporation of a wholly owned subsidiary company in Australia.

The table compares the two and serves as a good starting point for foreign companies considering establishing themselves in Australia.

Side notes

In this article any reference to a “company” is to a closely held or private company, referred to as a “proprietary company” in Australia. They are denoted by the abbreviations “Pty Ltd” in their name which means “Proprietary Limited”. The term “proprietary” refers to the fact that these types of company are limited as to the number of shareholders they can have, being no more than 50 shareholders. Public companies on the other hand, being companies that do not have “Pty” in their name, only the “Ltd”, can have an unlimited number of shareholders.
As at the date of this article, a large proprietary company is a company that meets at least two of the following criteria:
- annual revenue of $50 million or more;
- assets of $25 million or more; or
- 100 or more employees.

	Branch Office	Subsidiary Company
Status at Law	Not a separate legal entity. The foreign company has full responsibility for the actions (and inactions) of its Australian branch. It can sue and be sued for the operations of the branch office.	A separate, Australian, legal entity. The subsidiary company has full responsibility for the actions (and inactions) of the Australian business. It can sue and be sued for the operations of the Australian business.
Liability	The foreign company remains liable for the business activities conducted in Australia.	Liability and risk associated with the Australian business sit with the subsidiary company.
Registration	The foreign company must be registered with ASIC.	The subsidiary company is incorporated under Australian laws and registered with ASIC.
ASIC Registration	Issued with a unique, 9 digit, ARBN (Australian Registered Body Number).	Issued with a unique, 9 digit, ACN (Australian Company Number).
ABN	A foreign company wishing to conduct business in Australia must apply for an ABN (Australian Business Number). ABN’s are issued by the Australian Tax Office (ATO).	A subsidiary company wishing to conduct business in Australia must apply for an ABN (Australian Business Number). ABN’s are issued by the Australian Tax Office (ATO).
Name	A foreign company must register its name with ASIC as it appears on the foreign company’s existing certificate of incorporation. The name cannot be identical to the name of an existing company or business in Australia.	The subsidiary company can use any company name that is not identical to an existing company or business name in Australia.
Registered Office Address	The foreign company must have a registered office in Australia where correspondence can be sent. A registered office does not need to be the foreign company’s place of business. The address cannot be a post office box.	The subsidiary company must have a registered office in Australia where correspondence can be sent. A registered office does not need to be the subsidiary company’s place of business. The address cannot be a post office box.
Financial Reporting Obligations	The foreign company is required to file annual financial reports with ASIC including balance sheet, profit and loss statement, cash flow statement and any other document the foreign company is required to prepare in its country of origin.	Large proprietary companies must prepare and lodge a financial report and a director’s report for each financial year. Small proprietary companies generally do not have to lodge financial reports.
Tax	A foreign company is generally taxed as separate entity in Australia. Specialist tax advice is recommended prior to establishment.	Is an Australian resident for tax purposes and taxed on all income regardless of the source at the fixed Australian company tax rate of 30%. Specialist tax advice is recommended prior to incorporation.
Tax File Number	Must register for a TFN (Australian Tax File Number)	Must register for a TFN (Australian Tax File Number)
Tax Returns	Must lodge a company tax return each year with the ATO.	Must lodge a company tax return each year with the ATO.
GST	Must register for Goods and Services Tax (GST) if gross income exceeds $75,000.	Must register for Goods and Services Tax (GST) if gross income exceeds $75,000.
Minimum Capital Requirements	None.	None.
Local Agent	A foreign company must appoint a local agent who must be an individual or an Australian company who is resident in Australia.	Not required (but a resident director is – see below)
Directors	Not applicable.	At least one director must be Australian resident (ordinarily reside in Australia).
Secretary	Not applicable.	Not required but if the subsidiary company elects to have a Company Secretary, then that person must be Australian resident.
Shareholders	Not applicable.	Must have at least one shareholder who does not need to be an Australian resident. Cannot have more than 50 shareholders. Can be 100% owned by a foreign company.

The above table will provide a good starting point and guide for foreign companies considering the two most common options used by foreign companies wanting to establish their business in Australia. Please note that it is intended as a starting point only, we have not discussed matters such as:

Foreign Investment Approval: which is generally required for acquisitions of 20 per cent or more of an Australian entity or for high value land, agricultural and sensitive businesses and more commonly, required for all acquisitions of residential land by a foreign person.
Surcharge Duty: which is an 8% tax on foreign persons who buy residential land in NSW.
Australian Consumer Law and other cornerstone legislative requirements such as employment law or intellectual property law (registration of a trademark or trademarks is in Australia by a foreign company always being highly recommended).

If you have any further questions or queries about commencing business in Australia, our commercial law team here at Roberts Legal are more than happy to assist with any overseas enquiry. And remember, our approach here at Roberts Legal is to make business happen, not to get in the way.

Commercial Lawyers for Sydney and Newcastle

Need Answers Fast? Contact Us Today

Fixed Fee Initial Consultation 1300 553 343

The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.