[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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has their own taxation framework which may create additional tax liabilities for entities that conduct business in Australia. Examples of such state-based taxes include: ▪ Payroll Tax : Each State and Territory has a Payroll Tax system under which an employer is liable to pay tax on the value of the employer’s monthly payroll expenses (including any relevant fringe benefits). Payroll Tax rates are generally between 4-7% but may differ significantly between each State and Territory. Each State and Territory also has a monthly wage threshold test to determine whether an employer is required to pay Payroll Tax. ▪ Stamp Duty : Individuals or entities that acquire land, certain interests in real property or interests in other entities that have significant land holdings may be required to pay an additional state-based tax known as Stamp Duty. Acquisitions to which Stamp Duty may apply, and the relevant rate of such Stamp Duty, varies significantly from State to State. Acquisitions of real property by foreign investors will often attract a higher rate of stamp duty. ▪ Land Tax : Individuals or entities that are the registered proprietor of Australian real property will also incur an annual Land Tax liability. Similar to Stamp Duty, the types of real property that will attract a Land Tax liability, and the relevant rate of such Land Tax, varies significantly between the States and Territories.
Capital Raising Regulation The Corporations Act provides a framework for regulating fundraising activities (including capital raising) within Australia. The relevant provisions of the Corporations Act impose rules regarding offers or invitations to subscribe for new ‘financial products, including shares, units in a trust, partnership interests and debentures in respect of both private and publicly listed entities. The underlying principal of the fundraising rules under the Corporations Act is that, unless a specific exemption applies, a person must not make an offer in respect of a new financial product before providing potential investors with a disclosure document. Depending on the circumstances of the offer and the characteristics of the target entity, the offering party may also be required to lodge a copy of the relevant disclosure documents with ASIC, prior to extending the offer to potential investors. Generally speaking, a disclosure document must be in the form of a prospectus, which, depending on the nature of the financial product, can be either a long-form or short-form document. There are specific exemptions which allow for much simpler disclosure documents to be used in certain circumstances. There are certain types of offers in respect of financial products which are exempt from the disclosure requirements set out in the Corporations Act. These include: • offers to subscribe for new shares that are issued under an employee incentive scheme; • offers to sell existing financial products (being financial products that are sold more than 12 months after the date that they were first issued); • offers made to “sophisticated investors”, being investors that hold net assets or
ILN Corporate Group – Establishing a Business Entity Series
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