Company Formation in Australia

Before deciding to set up a new company in Australia, read the information below to understand the characteristics of a Proprietary Limited Company (Pty Ltd):

Shareholders: at least one shareholder (can be of any nationality; individual or legal entity).

Director: at least one director with Australian residency (only an individual).

Company secretary: at least 1 company secretary (optional).

Minimum share capital: no minimum requirement for the share capital.

Legal address: companies are required to have a registered office address; this address must be within Australia and can't be a post office box address.

Liability: shareholders have limited liability, which means their personal assets are protected if the company incurs debts.

Accounting: company may be required to prepare and lodge financial reports with ASIC; must file an annual company tax return and an annual income tax assessment with the Australian Taxation Office (ATO).

The standard company tax rate in Australia is 30%. However, eligible businesses can benefit from a lower company tax rate of 25%.

To qualify for the lower rate, your business must meet the following conditions:

• Aggregated turnover - your company's aggregated turnover must be less than $50 million;
• Passive income - 80% or less of your assessable income should be categorized as "base rate entity passive income." This typically includes income from sources like interest, dividends, and rent.

PIT rates for an Australian resident:

• 0 – $18,200 - 0%
• $18,201 – $45,000 - 16% for each $1 over $18,200
• $45,001 – $135,000 - $4,288 plus 30% for each $1 over $45,000
• $135,001 – $190,000 - $31,288 plus 37% for each $1 over $135,000
• $190,001 and over - $51,638 plus 45% for each $1 over $190,000

The above rates do not include the Medicare levy of 2%.

Australia does not have a Value Added Tax (VAT) system. Instead, it uses the GST system, which is similar to VAT systems in other countries.

GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

However, there are certain items exempt from GST, referred to as "GST-free sales". These GST-free sales include essential items such as most basic food, some education courses, some medical services, and exports.

Registration for GST is mandatory if your annual turnover exceeds $75,000.

Double taxation avoidance agreements in Australia: ‍Argentina, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Fiji, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kiribati, Korea (Republic of), Malaysia, Malta, Mexico, Netherlands, New Zealand, Norway, Papua New Guinea, Philippines, Poland, Romania, Russia, Singapore, Slovakia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States of America, Vietnam.