Establishing a Company in Australia: Compliance made easy
Establishment
Australia’s strong economy has seen it clock up 27 years without a recession. This, combined with a trusted system of government and close proximity to Asia, makes a strong case for establishing a business in Australia.
Whether it be through an Australian local subsidiary or a branch of the foreign company, it’s important to ensure that an organisation’s corporate records are properly maintained as required by the Australian Securities & Investments Commission (ASIC).
Tax is a key consideration in deciding the most appropriate structure from which to conduct business, and in most cases, a formation of a local Australian corporate subsidiary facilitates a straight forward approach to business operations in Australia, helping to reduce the exposure of the overseas parent entity to legal liabilities of the Australian operations. Regulatory institutions, customers, suppliers, and employees alike are more comfortable dealing with a local Australian company which provides for greater administrative ease.
Companies and their officers are governed in Australia under the Corporations Act 2001. The governance requirements for operating an Australian company include;
• the appointment of at least one resident Australian director.
• nomination of a registered office in Australia.
• maintenance of the corporate register detailing the officeholders, shareholders and corporate charges, along with the maintenance of minutes of directors and shareholders.
In addition to the above requirements, the Taxation Legislation which is administered by the Australian Taxation Office (ATO) also includes the requirement for the appointment of a resident Public Officer, to be responsible for the tax affairs of the company.
Bank accounts
Opening a bank account in Australia has become increasingly difficult following the introduction of AML/CTF legislation. Where a company is owned by a foreign person or corporation or has foreign directors, significant challenges can be faced in trying to quickly establish a company bank account. Foreign persons and corporations will need to be identified by the bank, at best through the need for notarised identity documents, or by presenting themselves with their identity documents at the local Australian branch.
So too, initial tax registrations, including Australian Tax File (TFN) numbers and an Australian Business Number (ABN). Goods and Services Tax (GST) can be significantly delayed where foreign persons are directors of those companies as the foreign directors will need to be identified with the ATO.
Ongoing compliance
Once a company has been established, the ongoing compliance requirements include;
• the directors passing an annual resolution positively confirming the solvency of the company.
• lodgement of audited financial statements with ASIC, unless an exemption applies (see below).
• the maintenance of company registers including directors and members’ minutes and resolutions.
• Notification to ASIC of any changes to the company details including address of the company, details of the ultimate holding company and details of the directors and shareholders,
It is important that any required changes to company information are identified and lodged within the relevant time periods so as to ensure that the company is compliant with the regulations of the Corporations Act 2001 and to avoid late lodgement penalties.
Foreign-owned companies are required to lodge audited financial statements with ASIC unless they qualify as small, and apply for the exemption allowed under ASIC Corporations (Foreign-Controlled Company Reports) Instrument 2017/204. The requirement to prepare and have audited financial statements can be burdensome and expensive and, accordingly, where possible, we generally recommend the exemption be obtained (even where you may otherwise choose to audit the financial statements).
A company’s registered office is the official location for communications and notices. A document may be served on a company by delivering it at or mailing it to, the company’s registered office. The office must be open to the public between the hours of 10 am and 4 pm each business day. It is important that any changes to a company’s registered address are updated with ASIC on a timely basis to ensure that any notice served on the company at the registered address is appropriately delivered so as to avoid significant fines, penalties and in the case of company’s directors, personal liabilities.
Following the recent introduction of legislation dealing with Significant Global Entities (defined as groups with over AUD1billion in turnover), there have been significant changes in the reporting obligations and substantial increases in the potential penalties handed to Australian subsidiaries for failure to comply. It is important that you are kept informed of such changes in Australian legislation to ensure you don’t inadvertently become subject to penalties for failure to comply.
What we can offer
McBurneys are not only able to assist you to establish your subsidiary but are able to act as resident director and public officer for your company. Please contact us should you wish to discuss how we can assist you or your clients.
McBurneys provide corporate secretarial services to some of the worlds leading multinational companies. We can help work around some of the regulatory hurdles and in many cases can have your company up and running with all taxation registrations and bank accounts within 24-48 hours.
Contributing Advisors
