If Australia’s not on your radar, it should be.
This modern and stable economy – whose key sectors reflect Canadian strengths – boasts one of the world’s most transparent regulatory environments and a wealth of high-quality business opportunities.
Explore your possibilities through these connections:
EDC Chief Representative
Where will Canadian businesses find opportunities in Australia?
Australia has seen 104 consecutive quarters of growth as of September 2017. Under such conditions is it not surprising that there are numerous opportunities for Canadian exporters and investors in this great country. The big areas are oil & gas, technology, infrastructure and the renewable energy space. In recent years the government has launched one of the most ambitious infrastructure programs and we have seen an increase of Canadian investors taking advantage of the opportunities that have surfaced under the privatization and various state asset recycling programs. Many of these projects will be built on a Public-Private Partnership basis where Canada is a global leader. Note that Australia is welcoming investment and supply in areas that match up perfectly with Canadian expertise, most notably oil & gas as well as infrastructure development. Canadian businesses have a very strong presence here; Canada is one of the largest investors in the infrastructure sector and also has an important presence in other sectors.
What challenges and barriers do Canadian companies face in Australia?
Barriers to entry in this market are relatively low. The challenges tend to be the ones that all exporters face such as how to do business in a different country and how to compete against strong local companies or international companies that are currently successful in Australia. It’s equally important to set the right expectations and be prepared to invest the time and resources required to develop opportunities. SMEs should be looking to partner with already established successful companies.
How can companies show commitment to the market?
To show commitment to the Australian market, a company needs to have some sort of representation office or partner here as well as be available to support with after-sales service. This is hard to do if a Canadian exporter needs to cross the Pacific Ocean to respond to a customer need. Something that Canadian suppliers need to keep in mind is that doing business in Australia is about selling into Australia as well as into the supply chains of huge markets in Asia.
Senior Trade Commissioner, Sydney
Canadian Trade Commissioner Service
What market entry model do you typically recommend to Canadian companies?
We advise Canadian companies to establish a presence in Australia and/or establish a relationship with a local partner as a way to increase their chances of being invited to tender for a contract. Given the significant time difference between Canada and Australia, it is also important to provide on-the-ground support and after-sales service, especially in case of an emergency. So it makes sense for a company to get a partner here in the market.
What should Canadians look for in an Australian partner?
The right partner will have in-depth knowledge of the industry, be well connected and, sometimes, have the ability to service the equipment of Canadian companies. The Trade Commissioner Service can work with Canadian clients to understand their requirements and provide a short list of qualified local partners that could be a good fit. Once a partnership agreement is signed, the TCS can work with the local partner to support their business development objectives as long as their activities have a positive economic impact for Canada.
How else can the Trade Commissioner Service help?
The TCS in Australia aims to organize a number of trade and investment missions each year in collaboration with various partners such as Export Development Canada and provincial governments. We work with participating companies to understand their objectives – for example, increase market intelligence, develop business contacts, increase sales – and screen potential local partners with a view to organizing productive business-to-business meetings. For companies that are new to the market, we can also organize industry briefing sessions with service providers such as law firms, accounting firms or economic development agencies.
The Polyglot Group
How would you describe Australia’s labour market?
Australia is a very fluid market where we have seen a war for talent in many industries. IT remains a tight market, while middle management employees are always in demand across all markets. The reason for this is that Australia’s system creates strong specialists, but not so many generalists. This creates a challenge for foreign companies that want to hire a generalist manager as their country manager in Australia.
Does this make it hard to employ workers here?
By registering as a business in Australia, a company would get the right to employ people locally and get a visa for an expat. This would cost only a few thousand Australian dollars. Australia is very welcoming to employers in that sense, but companies still need to ensure they have the right labour agreement, process and procedures in place.
Are there particular areas or regions that are more attractive for Canadian companies looking to bring expat employees to Australia?
Sydney and Melbourne are where expats tend to go – these are the top two spots for Canadians, and a lot of Canadian headquarters are located in Sydney. Other areas that attract a lot of Canadians are Brisbane and Perth, largely because of the mining industry. With these four cities you have the bulk of where Canadians are setting up operations and employing expats in Australia.
How would you describe Australia’s legal and regulatory environment?
Australia has a very strong and transparent legal and regulatory framework, which is very attractive to foreign companies intending to do business in Australia.
How does this regulatory framework affect setting up a business?
Yes, it does. An Australian company can be incorporated within a day once all of the requisite consents and other documentation have been received. Importantly for foreign investors, an Australian proprietary company must have at least one director who is ordinarily resident in Australia. An Australian public company must have at least three directors, two of whom are ordinarily resident in Australia, and at least one company secretary who is ordinarily resident in Australia. However, the shareholders of an Australian company do not need to be Australian.
What should exporters know before bringing goods and services to Australia?
Australian consumer laws are very robust, particularly regarding product liability and labelling. Australia also has comprehensive quarantine laws, which are especially relevant to Canadian exporters of food products.
Tax Agent and Companies Director,
Any key differences between the Australian and Canadian corporate tax regimes?
Canada has state and federal taxes. Here we just have federal tax for Corporate tax and GST to keep things simple.
So from a corporate tax perspective, no difference wherever you locate your business in Australia. The income rate will depend of your turnover, the normal rate is 30% that is reduced at 27.5% until you reach 10M turnover in 2016-17, and 25M (anticipated for 2017-18).
Same is valid for the GST (VAT) that is everywhere 10%. No Council or Regional tax for businesses.
Nevertheless, location of your operations will have an impact on payroll tax if large payroll costs. Depending on the state you operate, you will pay about five per cent of payroll tax once you reach, and only above, a certain threshold in total wages. The threshold and rates varies between each state.
Any other insights into payroll expenses?
Employers don’t need to withdraw any social security from their employees’ pay slips. The only thing employer withdraw from their employees’ salaries is their own income tax. The employer social additional cost is limited to a compulsory 9.5-per cent superannuation, which is a contribution for employees’ retirement.
Tip: on negotiation, avoid Fringe Benefit very heavily taxed, all is supposed to be on the payroll (see FBT).
Are there any particular corporate structures that work better for Canadian companies?
We recommend forming a local company owned 100 per cent by the Canadian entity versus an Australian branch office registration of the Canadian Company.
If you registered a foreign branch, the Australian Authorities requires you to lodge every year, an audited report of the head office to show that this company continue to exist. If you’re a local company, you don’t need to file any set of Financial Statements audited until you reach two of the three following criteria: $25 million in annual revenue, $12.5 million total of your balance sheet and the equivalent 50 employees full time.
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