[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA THE AUSTRALIAN REGULATORY FRAMEWORK Australia’s government system is comprised of three levels – federal, state or territory, and local. Laws are established by all three levels of government, with each government holding authority to legislate over different areas. Investors should be mindful that legislative authority may overlap across the three levels, and relevant laws may differ across states or territories. In addition, Australia’s laws are shaped and developed by the decisions of an independent judiciary. The Federal, or Commonwealth Parliament, is granted constitutional authority to legislate in areas such as taxation, foreign investment, defence, telecommunications, interstate and international trade, trademark and patent registration, and foreign affairs. Federal laws will prevail in the event of any inconsistency with state/territory or local laws. The state and territory parliaments may pass laws for any purposes except those specifically reserved for the Commonwealth Parliament by the Constitution or those referred by the states to the Commonwealth. Some areas under state and territory authority include stamp duty, land tax, energy, mining, competitions, infrastructure, and transfer of land. There can be significant differences between the laws and regulations across the various state or territory jurisdictions. Local governments have limited authority focused on areas such as planning, local roads, and local services. TYPES OF BUSINESS ENTITIES There are a number of business structures to choose from when starting a new business venture in Australia. Investors need to
determine which form of business organisation is the most appropriate for their requirements. The main types of business structures used by investors in Australia are: • companies, including branch offices of foreign companies;
partnerships;
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joint ventures; and
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• trusts. Each structure has different characteristics and obligations. Therefore, specific legal and accounting advice should be obtained before deciding upon the most appropriate investment vehicle. Company All Australian companies are regulated by the Corporations Act 2001 (Cth) ( Corporations Act. The primary regulator of companies is the Australian Securities and Investments Commission (ASIC). The functions, powers, and responsibilities of ASIC are established by the Australian Securities and Investments Commission Act 2001 (Cth). A foreign investor can register an Australian company under the Corporations Act. The “limited liability” company is the most common business structure used by foreign investors in Australia. A company is its own legal entity and has the same rights and obligations as an individual person. This means that a company can incur debt, can sue and be sued, is taxed as a separate legal entity and must file its own tax return. A significant benefit in choosing a company structure is that the liability of the owners of the company (the shareholders) to third parties is
ILN Corporate Group – Establishing a Business Entity Series
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