Australia company formation – frequently asked questions

An Australian Company Number (ACN), is issued only to businesses that wish to register as a limited company. It is a 9-digit number that is issued by the Australian Securities and Investments Commission (ASIC) and is an identifier for ASIC to monitor the company’s activities. It confirms to the public that they are dealing with a limited company.

An Australian Business Number (ABN) is a unique 11-digit number given to any entity that is undertaking any form of business in Australia. It is issued by the Australian Taxation Office (ATO) and its basic function is to allow the government to keep track of your business activity and taxes. It also works as an identifier for other businesses that you may work with.

A company’s ABN will include its ACN followed by two additional digits.

A company name is the official registered name of the business and is required to include the legal terms or abbreviations ‘pty’ and/or ‘ltd’ at the end.

A business name helps customers find, identify and connect with your business. Legal entities must register a business name when they want to trade under a different name from their legal entity (company) name.

A trading name is an unregistered name that businesses used before the introduction of the National Business Names Register in 2012. It is not am officially registered business name. Trading names will be displayed on the Australian Business Register (ABR) till 31 October 2018 for businesses to decide whether to register them.

There are four main types of business entities recognized in Australia. Below is a summary of each of them:

  • Sole trading

    Ideal for individuals who wish to trade legally on their own, a sole trading firm is a great option for small businesses. The entity is easier to handle, had less legal and accounting requirements, but makes the trader fully liable.

  • Company

    A company can either be proprietary or public. It is a separate entity from the founders and members and liability is limited by a share capital.

  • Partnership

    A partnership is a small group of people (no more than 20) who work together and distribute the common revenues between themselves.

  • Trust

    A trust’s profit is given to beneficiaries. The trust appoints a trustee to manage assets, conduct business and distribute profits to beneficiaries according to the trust deed. The trustee is liable before the law.

Any Australian company, partnership, or trust in which foreign individuals or companies hold a thin capitalisation control interest or a direct control interest is a foreign controlled Australian entity.

A public officer is a company’s representative to the ATO and is responsible for the company’s obligations under Section 252 of the Income Tax Assessment Act 1936. The public officer is responsible for the company complying with the Act and is also liable for the same penalties as the company, in case of any violations.

The main legal requirements to register an Australian company are as per below:

  • A business name;
  • A business name;
  • A resident director;
  • A company secretary;
  • A company constitution;
  • Share allotment structure;
  • A registered business office address.

According to the Corporations Act, the legal obligations also include ensuring company details are kept up to date, maintaining company records and details on the register, and paying the appropriate lodgement fees and annual review fees as required.

The complete process of registering a business in Australia takes approximately a week to complete, once the i) corporate structure is confirmed and ii) all incorporation documents are prepared and signed and legalized if necessary.

Yes, the Corporations Act of 2001 allows 100% foreign ownership.

The constitution of a company is a special type of statutory contract between the company, its members, the directors and the secretary. The constitution sets out the various rights of the members and directors, rules relating to the transfer of shares, provisions concerning members’ and directors’ meetings and rules by which the company is to be internally governed. You need a constitution if you are setting up a public company or a proprietary company.

A properly structured Australia private limited company is an excellent corporate vehicle through which business in Australia, and internationally, can be conducted.

An Australia company projects an excellent image to your customers, suppliers and potential investors. Australia also permits 100% foreign ownership. In addition, Australia is considered one of the easiest places in the world to do business.

If income and capital gains have already been taxed in a foreign jurisdiction, then exemptions are available.

Australia resident company must pay income and capital gains tax on worldwide-sourced income. The Australia corporate tax rate is 30%.

A business is deemed to be Australia resident company if it has been formed in Australia; if the company’s central management and administration is in Australia, even if it was formed in another jurisdiction; and if the company conducts business in Australia and its voting control is in the hands of resident Australian shareholders, even though it was incorporated in another jurisdiction or its central management is in another jurisdiction.

Non-resident companies are taxed only on Australian-sourced income and capital gains on the disposal of certain taxable Australian assets if acquired on or after 20 September 1985. (Capital gains on assets acquired before that date by non-resident entities are usually received free of Capital Gains Tax).

It is easy to open an international corporate bank account.

The Australian government provides incentives on a case-by-case basis. Incentives include assistance in training, research & development (R&D) and export market development; streamlined immigration procedures; assistance with obtaining information for site selection and introductions to relevant government agencies and professional service providers.

According to the government-run agency InvestAustralia, the Federal government provides incentives if it considers that a project offers significant economic benefits to the country.

An Australia company must submit annual accounts, tax return and undergo an audit.

Only one director is required.

To comply with Australian corporations law, at least one company director must be resident in Australia.

There are no minimum capital requirements.

There is a public register of shareholders, directors and beneficial owners of every Australian company.

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For more info on company registration, please contact our expert directly:

Mr. Petar Chakarov
Senior Manager, Sales & Business Development
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