Australia Entity Set Up

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Australia Subsidiary Entity Set Up

Expanding overseas is a major step. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into a new territory, maybe thousands of miles overseas.

Global expansion into Australia generally means that you need to set up an in-country entity. However, the sensible alternative is to use a Professional Employer Organization (PEO) EOR) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Australia – speedily and risk free. Your company will be up-and-running in days rather than weeks or even months.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.

In this guide, we will share which documents you need to establish an entity in Australia, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Australia.

How to set up an Australia Subsidiary

To incorporate a subsidiary in Australia, typically as a ‘proprietary’ limited liability Private Company (Pty), the parent company must comply with the Corporations Act (2001). 

Necessary steps include:

  • Decide on location and select a company name unique to Australia, with the suffix ‘Pty’ for a proprietary limited liability private company
  • File ‘Application for registering an Australian company’ with the Australian Securities and Investments Commission (ASIC)
  • Register office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • Register a local representative to receive legal and official documents
  • Obtain Australian Business Number (ABN) and Tax File Number (TFN)
  • Liaise with Business Registration Services (BRS) to obtain an Australian Company Number (ACN) and incorporation certificate
  • Register for Pay As You Go (PAYG) for withholding employees due income tax, and for Goods and Services Tax (GST) if turnover is expected to exceed AU$75,000 (€48,042, US$58,200)
  • Register with the relevant State Insurance Regulatory Authority (SIRA) to insure employees against illness or injury at work

What you need to set up an Australian Subsidiary

Incoming foreign companies need to have settled certain questions before they can set up a subsidiary, usually as a proprietary private company (Pty) with liability limited by shares. The subsidiary operates under the Corporations Act but can also draw up its own constitution.

Requirements include:

  • An approved company name registered with the Australian Securities and Investments Commission (ASIC)
  • Registered office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • A local representative, authorized to receive legal and official documents
  • Memorandum of Association including company name and registered office, share capital structure, relationship between company and shareholders and their liability
  • Articles of Association regarding responsibilities of directors and company secretary and information on board and general meetings
  • Statement giving full details of shareholders and directors. Directors must fulfill obligations under the Director ID requirement to receive the unique director identifier
  • Australian Business Number (ABN) and Tax File Number (TFN)
  • An Australian Company Number (ACN) and incorporation certificate, obtained from the Business Registration Services (BRS)

Benefits of setting up an Australian Subsidiary

Specific advantages for an international company setting up a proprietary subsidiary in Australia include not being responsible for the subsidiary’s debts or liabilities. The liability of the subsidiary’s shareholders is limited to their investment in shares.

The subsidiary can function entirely independently of the parent company, under a separate name, and pursue its own business opportunities. The subsidiary operates under Australia’s Corporations Act (2001) in the same way as local companies and businesses. It is taxed on is worldwide income.

Through its subsidiary, the parent company has the advantage of exploring further afield among other economies in Pacific Rim, where Australia is already a major force.

Other benefits for a subsidiary:

  • Easier to obtain regulatory approvals, loans and finance and enter into contracts with other Australian companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from working in a branch

In the wider commercial sense opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the Pacific Rim and Asian economies.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Australia.

Using a global Professional Employer Organization (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles, and be up-and-running within days, rather than months, with all the difficulties of payroll, taxation, and compliance under control thanks to our Employer of Record (EOR) services. You have day-to-day operational control of your employees, while we take the hassle off your hands.

Australia Subsidiary Laws

Subsidiaries in Australia are mainly governed by the Corporations Act (2001) and the Australian Securities and Investments Commission (ASIC). Once registered, a subsidiary can act as an independent legal entity and follow its own business practices without the parent company having any responsibility for debts or liabilities beyond its share capital in setting up the subsidiary.

Subsidiary laws include:

Registration and Documentation

  • File ‘Application for registering an Australian company’ with the Australian Securities and Investments Commission (ASIC)
  • Register office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • Register a local representative to receive legal and official documents
  • Obtain Australian Business Number (ABN) and Tax File Number (TFN)
  • Liaise with Business Registration Services (BRS) to obtain an Australian Company Number (ACN) and incorporation certificate
  • Register with the relevant State Insurance Regulatory Authority (SIRA) to insure employees against illness or injury at work

Accounts and Taxation

  • Register for Pay As You Go (PAYG) for withholding tax and Goods and Services Tax (GST) if turnover is expected to exceed AU$75,000 (€48,042, US$58,200)
  • Foreign-owned subsidiaries need only submit their accounts to ASIC, not those of the parent company, and become an Australian-resident company for tax purposes on its worldwide income, subject to any Double Taxation Agreements (DTAs). Rates can vary between 27.5% and 30%
  • Lodge annual company tax return to the federal authorities, regardless of whether tax is due

Management

  • Memorandum of Association including company name and registered office, share capital structure, relationship between company and shareholders and their liability
  • There must be a minimum of one shareholder up to a maximum of 50, excluding employee shareholders
  • Articles of Association regarding responsibilities of directors and company secretary and information on board and general meetings
  • Directors must verify their identity as part of the Director ID requirement to obtain a permanent unique identifier. Exiting directors have a November 30, 2022, deadline to register; directors appointed between November 1, 2021, and April 4, 2022, must apply within 28 days of their appointment; from April 5, 2022, potential directors must apply before being appointed
  • Provide statement of shareholders and directors, which should be reviewed and re-submitted annually. The subsidiary is not required to have a company secretary, but if it has one or more at least one must be Australian
  • Proprietary subsidiaries must have at least one director, normally residing in Australia
  • No requirement for annual general meetings, but directors’ board meeting usually held annually to approve accounts

Take a faster route into the Australian economy

The cost-effective and time-saving alternative to the expensive and lengthy process of establishing your subsidiary in Australia is to work alongside a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs.

We have over 20 years’ global experience. Our in-country specialists will steer you through the complexities of setting up operations by locating and onboarding new employees, then ensuring compliance with all employment and tax regulations.

You retain day-to-day control of your staff – who are in place and operational within days rather than the months it could take to incorporate a legal entity. There is no reason for international borders or thousands of miles to stand in the way of your international expansion. Contact us today for more information on global expansion!