A subsidiary company is a separate legal entity, which means that the subsidiary company is created either as a business or a corporation with partial liability. The parent company controls the subsidiary with the bulk of shares owned by them, and continues operating with the same control the board of directors hold within the parent company. Hence, the parent company holds majority control of the subsidiary company, and the other percentage is owned by a separate firm. A subsidiary company creates an excellent opportunity to expand your business locally and globally.

Expanding your business into the Australian economy is a huge commitment. Australia is immensely diverse in terms of its multicultural and skilful work atmosphere. The tax structure is competitive, the economy is strong, the workforce is stable, and includes fabulous infrastructure which makes it the perfect setting for international investments.

In this article we explain how and why to set up a subsidiary company in Australia.

SET UP YOUR COMPANY

1. Company Operation

Before registering your company, you need to understand the bodies which govern the industry, namely constitutional requirements (no, not the Australian Constitution) and expendable rules. The basic rules and regulations for the management are available in the Corporations Act.

Should the company choose to omit the constitutional requirements, the replaceable rules can be made of use. This means you don’t require an inscribed constitution and as new laws are made, you are not required to constantly update your company operation which means fewer expenses.

2. Constitution

According to the procedures, the business can have a transcribed constitution in place of replaceable rules. There are different rules for solo directorship and member-exclusive companies. If the proprietary has a single administrator, they don’t need a constitution.

3. Share Structure

A registered company cannot have more than fifty non-worker shareholders and have either limited stocks or be an unlimited firm that has stock assets. They also cannot propose or come to an agreement in which to hand over any shares to the associates of the business or any employee who works there. This has to be in accordance with the prescribed company operation.

4. Responsibilities of an Administrator

As an administrator, you should comprehend your responsibilities. You need to oversee following the laws of the Corporations Act which ultimately stipulate your legal duties. This includes but it not limited to:

• Ensuring that every detail of your company is updated;
• Maintaining the firm’s archives and information;
• Paying the applicable lodgement dues and yearly evaluate payments as necessary; and
• Liability of employees.

REGISTER YOUR COMPANY

Setting up a subsidiary company in Australia is easy. However, the succeeding bureaucracies should be completed to finish the registration process. The first step is to

• File and register the Australian Securities and Investments Commission (ASIC) 201 form. It’s called the Application for registering as an Australian company, which registers the members of your board executives as well as pays the fee.
• Acquire a TFN (Tax File Number) and an (ABN) Australian Business Number (ABN).
• Obtain a permit of incorporation and get an ACN (Australian Company Number) through the (BRS) Business Registration Services.

It’s crucial to register, obey and pay the following:

• (PAYG) Pay As You Go withholding duty.
• (GST) Goods and Service Tax if the revenue surpasses $75,000
• Choose a brand name to ensure they support the nation’s requirements and guarantee that the brand name selected is not used.
• Hire a native representative to confirm the businesses follow the official system and authorize them to receive legal warnings.
• Create an Australian bank account for the workforce’s salary payoffs, launch a corporeal site, as the government laws fluctuate in Australia.
• Insurance must be registered at the (SIRA) State Insurance Regulatory Authority to protect against any mishaps at the workplace.

BENEFITS OF SETTING UP A SUBSIDIARY COMPANY

The benefits of setting up a subsidiary company in Australia are immense. They include but are not limited to, having greater access to the diverse industries in Australia and a range of Australian services and products. It is also more cost-effective for production and manufacturing as it allows you to take advantage of innovative technology, create brand recognition, and access a skilled labour force.

Australia’s redundancy rate is anticipated to decrease to about 4.75% by the year 2021. This alone should say the massive improvement of the industry. The GDP is also predicted to rise by 3.8% in the year 2021, in 2022 by 4.1%, and in 2023 by 3%.

Setting up a subsidiary company in Australia is relatively cost-effective with access to regions such as the Asian Pacific; a time zone that is convenient for businesses located in the USA. Further, it allows for trade introduction in Europe and vigorous monetarist services divisions. Entrepreneurial essence and global cultures have allowed Australia to become an ideal location to set up a subsidiary company.

With vast resources waiting to be explored, Australia is one of the most progressive countries of economic growth which makes it a secure and low-risk location to conduct business. The economy provides a flexible and strong structure with the prediction for 2020-21 to be a 3% increase in the growth of the economy. This alone should be a factor to consider in assessing whether to set up a subsidiary company in Australia.

Furthermore, your assets add international security to your portfolio. With a stable and well-established government, you have the ability to adjust well to worldwide change. The ever-modernized technology allows your company to assist in the development of the Australian economy. This gives you the satisfaction of knowing you had a part in the growth. 

Notably, Australia also has a Free Trade Agreement (FTA) with countries such as the USA, New Zealand, Thailand, Singapore, Malaysia, Hong Kong, Peru, Japan, Chile, Korea, and ASEAN countries. This offers economic ties worldwide. Australia also has a Double Tax Agreement (GTA) with 45 different countries.

KEY TAKEAWAYS

1. It is imperative to understand how current businesses function in their current country and then adopt and adapt the structure to function in Australia.
2. The thorough policy of the firm’s overall aims is to be analysed along with the development program while examining Australia’s corporate structure.
3. Once the decision to set up as a subsidiary has taken place, the tax scheme has to be listed as a few multinationals take advantage of the DTA (Double Taxation Agreement).
4. Finally, the establishment must strategize its extended goals perhaps of about two, five, or 10 years and their outsourcing as in equipment, employee’s, etc. requirements.