In Australia, it is possible to use a unitary trust company as an alternative to a commercial company.

Society Constitution
offshore in Australia

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are no legal penalties for disclosing the customer's bank details to third parties.

β€’ Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are largely required to maintain sufficient records of their customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are not required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information on request without qualifications.

β€’ There are undue notification and recourse rights against the exchange of banking information upon request, but with some problems.

2. Legal forms

LThe business entities most used by investors are the Australian Limited Liability Company

Australian business trusts

β€’ In Australia, it is possible to use a unitary trust company as an alternative to a commercial company. To do so, the trustee (s) must register the trust with the Australian Business Register and the tax authority to obtain an Australian Business Number and a Tax File Number.

β€’ The main requirement for acceptance is to appoint a resident as

  • i) trustee (if all trustees reside abroad)
  • ii) public official.

β€’ The business trust is generally structured as a transparent tax entity, not subject to corporate income tax in Australia, provided that all its income is transferred to the trust beneficiaries.

β€’ Best Uses for an Australian Business Trust - Business Trust is an interesting business vehicle for a family business

The Australian Limited Liability Company (LLP):

β€’ The incorporation of an LLP can be done between:

  • i) general partners who are personally responsible for the activities of the company
  • ii) limited partners who are only responsible for their committed contribution to the formation of the society. At least one general partner must reside in Australia.

β€’ Associations are usually transparent from a fiscal point of view. Income derived from
Partnerships are not taxed at the β€œcorporate” level, but rather as personal business income of the partners themselves. However, the association is still subject to standard GST and employer registrations.

Best Uses for an Australian LLP:
This entity is commonly used to provide legal and accounting services to Clients.

The Australian Stock Company (Unlisted Public Company)

β€’ Registration of a public company in Australia follows similar requirements as for a proprietary company.

β€’ The main differences are the need to appoint at least three directors, two with habitual residence in Australia and the obligation for the financial statements to be audited (while the owner companies can benefit from the SME exemption).

Best Uses for an Australian PLC:
The Australian public company is often used by entrepreneurs who want to ensure that the management represents all parties and that the financial statements represent a fair summary of the profit and loss of the company. Such an entity is also required prior to an eventual initial public offering on the Australian Stock Exchange.

The Australian Free Zone Company

EThis entity does not currently exist as Australia does not yet have special economic zones.

DOING BUSINESS IN AUSTRALIA WITH A FOREIGN ENTITY

The Australian Branch

LThe incorporation of the branch requires:

  • i) the appointment of a local agent to accept notices on behalf of the foreign company.
  • ii) an address registered in Australia. After registration, the branch must submit annual financial statements to the Australian Business Register (ASIC)

Best Uses for an Australian Branch:
A branch is recommended only if operations in Australia will be simple to manage from the foreigner and do not create any legal risk. Another advantage of the branch is that its results

The Australian Representative Office

UA foreign company that does not intend to do business in Australia may try to establish a representative office for marketing and research. The representative office can only carry out limited and non-commercial activities in Australia.

Best Uses for an Australian Representative Office:
The representative office is an attractive business entity before the first companies in Australia, when our Client only wants to carry out a market study or have a local presence in the country.

REMEMBER

Se requires a resident Director for all types of entities in Australia.

What are the tax-exempt holding companies worldwide?

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OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

Accounting and taxes

TAX OBLIGATIONS

β€’ A non-resident business pays taxes only on Australian-sourced income. Global income is exempt from tax.

β€’ A Australian resident company pays taxes on your worldwide income. Non-resident companies are only taxed on their Australian-sourced income. A company is considered to be resident in Australia:

  • i) if it is incorporated in Australia
  • ii) if you do business in the country and are managed and controlled from Australia
  • iii) if you conduct business in the country and your voting power is controlled by Australian resident shareholders.

β€’ Companies in Australia (including branches) in fiscal year 2019-2020 pay corporation tax to:

  • i) a reduced rate of 27,5% if the annual turnover is less than 50 million Australian dollars
  • ii) 30% otherwise.

For fiscal year 2020-21, the reduced rate will be 26% and in fiscal year 2021-22 it will be 25%. See the Australian Tax Office website for details.

β€’ Dividends received by Australian resident shareholders are not taxable as they come from profits that have already been subject to Australian tax at the corporate level. Dividends received by non-residents are taxed at 30%.

β€’ Dividends paid to both Australian and foreign parent companies are exempt from tax, provided that corporate tax has been paid on the profits of the subsidiary. Otherwise, withholding at source is applied at the standard corporate tax rate, unless reduced by a tax treaty.

β€’ Interest paid to foreign entities by an Australian resident company is subject to a 10% withholding tax, unless reduced by a tax treaty.

β€’ Royalties paid to a non-resident by an Australian resident are subject to a 30% withholding tax, unless they can be reduced under one of the tax treaties Australia has signed with countries around the world.

β€’ Capital gains tax is 30% for Australian residents and 26% for non-residents.

β€’ State, territory and local governments do not impose additional corporate taxes in Australia. However, they do impose some taxes that could affect foreign companies operating in the country, including:

  • i) payroll tax (more applicable to larger employers)
  • ii) stamp duty.
  • iii) land tax

β€’ Employers must contribute 9.5% of an employee's gross salary to the Social Security and Unemployment Insurance Fund. Employers must also pay a 46% tax on all fringe benefits provided to their workforce.

β€’ Employers must withhold payroll tax owed on the wages and benefits of all employees. With an average of 5,5%, payroll tax rates are set by local authorities.

β€’ The sale and transfer of real estate is subject to a property tax of up to 7%, levied by local authorities.

β€’ Australian personal income tax is based on a progressive tax rate, which can go up to 47% (including a Medicare rate of 2%). The fiscal year of the personal income tax runs from July 1 to June 30.

β€’ For 2019/2020, income less than A $ 18.200 is free of income tax. For income above AU $ 18.200, a fixed amount may be imposed along with a progressive excess income tax rate based on income range.

β€’ Until June 30, 2022, a new tax incentive called LAMITO (Low and Middle Income Compensation) is available to those whose income is up to A $ 125,333

Country problems

- Every Australian company must have at least one director who habitually resides in Australia. Most of our clients request Foster Swiss to provide the Australian resident director.

-National and international income is subject to a standard corporate tax rate of 27,5%. Additionally, all companies are required to submit annual audited financial statements and a corporate tax return to the Australian Tax Office (ATO). An audit exemption is granted if the company's sales revenue is less than A $ 100.000.

-There is a public register of shareholders and directors. Although this limits privacy, it improves business transparency in Australia.

-Australia restricts foreign investment in residential real estate, media, telecommunications, transportation, defense-related industries, encryption and security technologies, communications systems, uranium or plutonium mining, and nuclear facility operations.

- Requirements related to business regulatory licenses vary by state. It is important that our client carefully check the licensing requirements in each state our client plans to do business in. There is a 75% probability that Australian banks will require to meet with a director or signatory of the bank at their branch, before accepting onboard a new customer.

- Australian banks often require bank signatories to call them for banking matters, but most of them only take calls during Australian business hours, which can be cumbersome for European and US entrepreneurs due to the time difference .

-Many Australian banks are reluctant to incorporate small businesses. For example, a bank in Australia requires companies with a minimum annual turnover of A $ 50 million to join.

-Other reasons Australian banks give for rejecting new accounts include:

  • i) Due to security and compliance reasons, they are unable to verify new Clients based on
    abroad
  • ii) all new Clients must have an Australian ABN and Commission list
    Australian Securities and Investments (ASIC) and must attend the Australian bank branch to
    check
  • iii) only open accounts for wholly owned Australian companies (i.e. they will not be incorporated into
    a company owned by companies not registered in Australia).

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

β€’ The national business registry includes the identity information of the legal owner.

β€’ Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

β€’ All businesses require the registration of all legal owners.

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.

β€’ Updating of legal property information is NOT mandatory for all partners.

5. Publication of Shareholders

β€’ There is no public register of shareholders. Although this limits privacy, it improves business transparency in Australia.

6. Publication of the company account

β€’ It is mandatory to keep accounting data.

β€’ Except for small businesses, annual accounts must be submitted to a public authority.

7. Country-by-country financial reports

β€’ No country-by-country public reporting at all.

8. Corporate tax return

β€’ The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR.

β€’ Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice.

β€’ Some unilateral cross-border tax rulings are posted online for free.

9. Identifier of legal entities

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

β€’ The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory for some financial market operators.

β€’ The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.

10. Measures to avoid tax evasion

<br>β€’ Dividend payments: Unilateral relief for double taxation through a tax credit system for a payment scenario (if the recipient is an independent or related legal person, or a natural person).

<br>β€’ Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).

11. Tax matters judicial secrecy

β€’ None or restricted access to CRIMINAL AND CIVIL TAX PROCEDURES.

β€’ Public access to both criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction DOES NOT issue or accept the circulation of large bills / cash notes of your own currency (value over 200 EUR / GBP / USD).

β€’ Bearer shares are not available / not circulated.

β€’ Series LLC / Shielded Cell Companies are not available.

β€’ Trusts with escape clauses are not prohibited.

13. Anti-money laundering legislation

β€’ Australia is not on the FATF List of countries that have been identified with strategic AML deficiencies.

β€’ Overall non-compliance score with FATF standards in percentage: 37,9%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).

β€’ The last Mutual Evaluation Report related to the implementation of anti-money laundering and terrorist financing standards in Australia was conducted in 2018. Based on that evaluation, Australia was deemed to be 17th and largely 9th out of 40 FATF recommendations. It was considered Highly Effective for 1 and Substantially Effective for 4 of the Effectiveness and Technical Compliance ratings

14. Automatic exchange of information

β€’ Australia signed the MCAA and committed to exchange information on or before 2019. The number of significant activated AEOI relationships (based on the MCAA) published by the OECD as of October 2019 is 96.

What type of private banking exists in Australia?

International Banking
Local banking

Central bank security ⭐⭐⭐

Each filtering bag international and digital banks They're available.

CRS: YES.

Real bank operations: 90%.

Type of visa: AUD $, US $, €.

Joint accounts

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Crypto-friendly banks: It depends on the correspondent bank.

Portfolio availability: No or depends on the correspondent bank.

Ability to issue letters of credit: SI.

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.