Non-residents and non-resident corporate groups doing business in Australia
Broadly, there are four different ways in which a non-resident corporate group can arrange to sell product into, or provide services, in Australia, each with different corporate administrative and taxation consequences, as summarised below:
- Arrange to ship goods to Australia to Australian customers who are the ‘importers of record’ of the goods. Many internet sales to Australia are made in this way. The foreign company has no Australian corporate or taxation obligations.
- Ship goods to Australia and import them into Australia, or provide services in Australia to Australian customers. The foreign company may not have any Australian corporate obligations or Australian income tax obligations, but it is probably liable for Australian goods and services tax (GST) and would therefore generally need to register for an Australian Business Number (ABN) and GST. In this case, the Australian Taxation Office (ATO) will also issue a Tax File Number (TFN). As a general rule, if the company does not expect to have a physical presence in Australia it does not need to establish a branch (item 3 below) or a subsidiary company (item 4 below) here.
- Establish a branch (or ‘permanent establishment’) of the foreign company in Australia by, say, having employees or contractors, or a place of business in Australia through which sales / services are made to Australian customers. A branch would require an Australian Registered Business Number (ARBN), obtained from the Australian Securities and Investments Commission (ASIC), and would also generally need to register for GST and obtain a TFN from the ATO. The foreign company would have Australian corporate filing obligations, income tax filing obligations, GST filing obligations and employment obligations, including the withholding of tax from employees’ remuneration, superannuation contributions (equivalent to social security), workers compensation insurance, and possibly payroll tax.
- Establish an Australian company as a subsidiary of the foreign company to make sales / provide services to Australian customers. A subsidiary would require an Australian Company Number (ACN) from ASIC and, usually, the Australian subsidiary, rather than the foreign company, then has the obligations listed under item 3 above including statutory audit requirements.
The process to register a foreign company for an ABN or ARBN is complicated by the fact that extensive original proof of identity documentation is required. HLB Mann Judd firms are familiar with the process, including being familiar with requests the ATO and / or ASIC usually make as part of the process that are not published. Accordingly, we can streamline the process for you.
If the non-resident company’s plan is to operate in the Australian market in the way described under item 2, it would also be necessary for the company to appoint a ‘public officer’ in Australia for tax purposes, being an adult individual (18 years or older) resident in Australia, who is liable for the doing of all things the company should do under Australian tax law.
If a technology business were to provide a tech support function in Australia – therefore having people and offices locally – options 3 or 4 would be more beneficial. If the technology business was promoting a product (a technology gadget for example) and selling directly to the Australian consumer, then options 1 or 2 would typically be more appropriate.