Australia is open for business
With a population of around 26 million spread mainly through sun-drenched cities and surrounded by beautiful beaches, Australia offers a lifestyle that is the envy of many around the world. We are a diverse and multicultural society, coming from every race, culture and nation.
Australia has a strong economy and ranks 13th in the world by GDP. We are amongst the largest economies in the Asia Pacific region, and prior to a brief Covid-induced downturn in 2020, had achieved a record 28 years of economic growth.
With a safe and stable environment and transparent regulatory systems, Australia is one of the easiest places in the world to do business. International investment is welcomed, and business is well supported by a willing and well-educated workforce. As part of the Commonwealth, our legal institutions and traditions are substantially derived from the English system, and the United Kingdom has always been a major trading partner.
Australia’s borders have reopened to the post-Covid world, and Australia has much to offer globally expanding businesses.
Why do business in Australia?
Australia is ideally located close to major Asia Pacific markets, and in a similar time zone to Japan, China and South East Asia. It’s a great location for UK, European or US companies to base their regional headquarters for expansion into Asian markets. For northern hemisphere businesses wanting a 24-hour global presence, the Australian time zone is perfect.
We offer an open market with minimal restrictions on imports of goods and services. A highly educated workforce and abundant natural resources has historically attracted high levels of foreign investment.
Incorporating a new company in Australia is fast and easy, with documents normally ready for signature within a day.
Australia has a strong banking sector and is one of just nine countries to hold a AAA credit rating from the three major rating agencies.
A strong services sector is the largest portion of the Australian economy. Recent economic growth has come largely from mining, while agriculture and tourism are also important parts of the economy.
The government has recently listed key industry sectors that they intend to target with funding and incentives. These priority sectors include energy and renewables, DigiTech, defence, health and life sciences, financial services and fintech, and advanced manufacturing.
Grants, Incentives, and Tax Considerations
While the nominal corporate tax rate is 30%, a small business rate of 25% applies to businesses with global group annual turnover below $50 million. A range of tax-based incentives and offsets mean that the effective tax rate is less than that (averaging 20.6% according to a recent Accenture report).
Australia’s R & D incentive scheme is particularly generous, offering a refundable tax offset of 43.5% for small businesses, and smaller non-refundable offsets for larger businesses.
A new Patent Box regime has been announced, and when implemented would reduce the corporate tax rate for eligible activities to 17%. Eligible activities include low emissions technologies, agriculture, medical and biotechnology sectors.
Conduit foreign income rules make Australia an attractive location for regional headquarters in the Asia Pacific region. These rules allow non assessable foreign income (eg foreign branch profits or dividends from foreign subsidiaries) derived by an Australian company to be distributed to a non-resident shareholder without attracting any Australian tax.
A “temporary resident” exempts individuals in Australia on a temporary visa from tax on their overseas income, and from capital gains tax on most assets (excluding Australian real estate).
Michael Goodrick is Managing Partner of Kreston Stanley Williamson Australia, a member firm of Kreston Global, an international advisory and accountancy network, for which Kreston Reeves is also a member. Find out more here.
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