Australia is an ideal location to expand your company thanks to its mixed market economies and low unemployment rate. By opening a subsidiary, you can find cost-competitive spaces, a skilled workforce, and a transparent environment that makes it easy for business.
How to establish an Australia subsidiary
The Australia subsidiary setup process begins with deciding what structure is best for your company. You can operate as a registered foreign corporation or a full Australia-based subsidiary company. A foreign corporation may not be taxable, while a subsidiary typically is. However, companies that plan to operate in the country long-term must incorporate with the Australian Securities and Investments Commission (ASIC) and create a subsidiary.
The setup process for an Australia-based subsidiary is as follows:
- Pick a company name that meets the country’s requirements and does not duplicate any other names.
- Nominate or appoint a local director and a secretary and get them authorized to accept legal notices. At least one director and secretary of an Australia-based subsidiary must be a resident of the country. If you choose to have international directors, they need to obtain a Director Identification Number.
- Obtain the consent of the owner of your registered office address.
- Register your company using the Australian Government Business Registration Service.
- Secure an Australian Business Number (ABN) and a Tax File Number (TFN) if you plan to trade in the country.
- Register for the Goods and Services Tax (GST) and Pay-As-You-Go (PAYG) withholding tax. Compliance with these and other tax measures is essential.
- Open bank accounts in Australia for payroll purposes.
Because some subsidiary laws vary by state, you need to make sure you are staying compliant with all local regulations once you begin operating in the region.
Australia subsidiary laws
Under prevailing corporate laws and regulations in Australia, a private company must have at least 1 employee shareholder and a maximum of 50 non-employee shareholders. These laws and regulations permit international ownership or shareholders of Australia-based companies, including both individuals and companies abroad.
Unlike many other countries, Australia does not have a minimum share capital requirement to form the subsidiary. Even AUD 1 is enough to register your company. Companies are required to lodge accounts with the ASIC, but they may not be required to disclose the parent company’s financial reports.
Australian law also requires established companies to pay an annual review fee. Make sure to review and confirm the information of the annual statement that is sent by ASIC. If any changes in your company have been made, these need to be updated through the filing of an additional form and pass a solvency resolution. In case these requirements are not met on time, companies are subject to late payment/filing/review fees.
Benefits of establishing an Australia subsidiary
Your subsidiary will operate as a separate legal entity from the parent company, which is one of the most significant benefits of setting up a subsidiary. In the event of any disputes, compliance issues, or other problems with the shareholders, resulting liability will often remain with the Australia-based subsidiary and not with the parent company.
Australia subsidiary laws also state that subsidiaries have a degree of independence from the parent company. They can tailor operations to meet the business needs in Australia and the country’s culture.
The subsidiary structure allows your company to operate like any other business in the country — a substantial benefit if you plan to stay in Australia long-term and want to develop additional business relationships. You can engage in trading activities, hire a local workforce, and produce goods in Australia to ship to other nearby countries.
Other important considerations
Before you invest in a subsidiary, understand that it takes a significant amount of time, money, and energy. You need the budget to operate in Australia long-term, and each portion of the setup process has different associated costs. Costs also differ by state, so it’s essential to know the country well to choose a budget-friendly area of operation.
A representative must often be present for any signatures on banking or corporate documents. This process requires an integral member of your company to travel back and forth to Australia for an extended period. You’ll also need to create the subsidiary before you can officially hire any employees — so if a worker cannot wait for a job, you could lose valuable talent in the time it takes to form your subsidiary.
Enter new markets with G-P — no new entities required.
Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 Global Growth Platform™ to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.
Get in touch today to learn more about how we can streamline the global growth process.