Entering the Market

The Australian Market

The combination of a strong economy, low unemployment, well-educated workforce, and high salaries make Australia attractive to foreign investors, although planned changes to Foreign Direct Investment laws unveiled in January 2021 introduce some issues for international companies. Also, companies establishing a presence in Australia face challenges complying with employment, tax, and company registration laws as they can vary between states and territories. Plus, hiring staff from abroad poses more complications – and risks.

There are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Australia. Work alongside our Professional Employer Organization (PEO) recruitment specialists, then utilise our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Australia and how to navigate challenging legislative issues revolving around federal and state laws and regulations. Here we have set out some basic summaries of what you need to make the transition into the Australian market, whichever sector you operate in.

Starting a Business in Australia

Australia lies outside the world’s top 10 economies – ranked 12th with a GDP of 2 trillion Australia dollars (€1.28 trillion euros, 1.44 trillion US dollars) – but is a major player among the ‘Pacific Rim’ and Asia-Pacific (APAC) nations. Australia ranks fourth among Pacific Rim economies while the economic heavyweights of China, US, Japan, South Korea, Thailand, and India also figure among their major trading partners. The World Bank ranked Australia 14th out of 190 countries in their latest ‘Ease of Doing Business’ report and fourth among member nations of the Organization for Economic Cooperation and Development (OECD). Australian authorities employ a structured framework for establishing a legal entity in the country, complying with the Corporations Act (2001). Foreign companies establishing a subsidiary typically choose a proprietary Private Company (Pty) with liability limited by share capital. After selecting a unique name, the company must file an ‘Application for registering an Australian company’ with the Australian Securities and Investments Commission (ASIC). Other steps include:

• 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’ 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

Expanding Business into Australia

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? International companies expanding into Australia quickly realize they need to base decisions on extensive research before drawing up a business plan for their new territory. A detailed blueprint will have to answer many critical questions.

Will staff be migrated across the world or recruited in-country? Who will handle payroll? How will your company deal with regulations surrounding taxation, entitlements and benefits, severance, and termination? In Australia, these questions are complicated by the sheer size of the country. Australia spans 2,500 miles from east to west and almost as far from north to south. Where will you locate offices, find distributors or manufacturers? The list grows, in addition to dealing with federal, state, and territorial regulations applying to employment and taxes. There is a simple alternative. By partnering a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Australia.

Australia Business Facts

• Capital city – Canberra
• Population – 26 million
• States and Territories – Australian Capital Territory, Queensland, New South Wales, Northern Territory, Western Australia, Tasmania, Victoria, South Australia plus various external territories
• Official language – English
• Economy and world ranking – 12th largest economy, GDP AU$2 trillion; €1.29 trillion, US$ 1.44 trillion
• Leading sectors in economy – Energy and resources; finance; clean agriculture; education; tourism; health services and consumer goods
• Main exports – Metal ores and scrap metal; coal, coke, and briquettes; natural gas; education travel services; foodstuffs and live animals
• Main Imports – Travel and educational services; refined and crude petroleum; machinery and transport equipment including vehicles; industrial and electrical machinery; telecommunication and sound equipment; chemicals
• Main trading partners – China, US, Japan, S. Korea, UK, India, Germany
• Government – Parliamentary, constitutional, and federal monarchy, representative democracy
• Currency – Australian Dollar AU$

Advantages of expanding into the Australian Market:

• Economy: Recession-free since 1991, Australia paints a positive picture for international expansion
• Consumers: Disposable income per household is higher than the average for members of the Organization for Economic Cooperation and Development (OECD), fueling a services sector that accounts for well over 60% of the GDP
• Global reach: Proximity to Asian markets such as Japan and South Korea, and closer alignment with their time zones, make Australia an appealing steppingstone for further international expansion
• Logistics: Despite its size, Australian markets are easier to access due to the vast majority of the population being concentrated in major cities such as Sydney, Canberra, Perth, Melbourne, Adelaide, and Brisbane
• Employment Market: Access to a well-educated and multi-cultural workforce, with close to 30% having been born overseas and two million conversant in an Asian language
• Business Focus: Emphasis on research and innovation

Challenges of expanding into the Australian market:

• International contact: Time zones affect conference calls. An early 8am meeting call from Sydney works out at 4pm in New York (the previous day) and nine o’clock the previous evening in London
• Red Tape: Tax filing, superannuation payments and exporting and importing, despite many Free Trade agreements, require dense bureaucratic processes stretching over days
• Business Environment: Adjusting to a work culture that confusingly combines a laid-back attitude with focused business practices
• Staff Transfer: If migrating workers into Australia, plan well ahead for obtaining visas and work permits
• Infrastructure: Applying for construction permits involves 11 layers of documentation