Australia is an ideal location in which to expand a business thanks to its mixed market economies and low unemployment rate. By opening a subsidiary, you can find cost-competitive spaces, an educated workforce, and a transparent environment that makes it easy for business.
How to Set up a Subsidiary in Australia
The Australia subsidiary setup process begins with deciding what structure is best for your company. You can operate as a foreign branch or a full Australian subsidiary company. A branch may not be taxable, while a subsidiary typically is. However, businesses 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 Australian subsidiary is as follows:
- 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.
- Pick a company name that meets the country’s requirements and does not duplicate any other names.
- Nominate or appoint a local representative and get them authorized to accept legal notices. At least one director of an Australian subsidiary must be a resident of the country.
- Open bank accounts in Australia for payroll purposes, and establish a physical location. Because some subsidiary laws vary by Australian state, you need to make sure you are staying compliant with all local regulations once you find a site.
Australia Subsidiary Laws
According to Australia subsidiary laws, you cannot have more than 50 non-employee shareholders if you establish your subsidiary as a limited private company. The country does not have any regulations on the percentage of foreign ownership, although you’ll need to appoint one director that is an Australian resident.
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. Businesses are required to lodge accounts with the ASIC, but they do not have to share any of the US company’s financial reports.
Australia Subsidiary Setup Benefits
Your subsidiary will operate as a separate legal entity from the US parent company — one of the most significant benefits of setting up a subsidiary. If there is any litigation, compliance issues, or other problems with the shareholders, it falls on the Australian subsidiary and not on the US company.
Australia subsidiary laws also state that subsidiaries have a degree of independence from the US company. They can tailor operations to meet the needs of the people in Australia and the country’s culture.
The subsidiary structure allows your company to run like any other business in the country — a substantial benefit if you plan to operate 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.
What Do You Need to Set up a Subsidiary in Australia?
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 less expensive 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 a period of up to six months. 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 start your business.
You can solve many of these issues by working with a global PEO. Globalization Partners takes the stress out of expanding your business to Australia. We hire employees on your behalf, so you can get to work sooner. We even act as the employer of record to take the liability off your shoulders. Contact us today to learn more.