Australian Tax

Australian Tax

Going Down Under?

Is a client seeking to set up a business in 'God's own country'? JON GOLDING provides some useful tips.

OVER 150,000 PEOPLE each year are estimated to emigrate abroad from the United Kingdom, many to set up business abroad rather than retire. John Howard, the Australian premier, is beginning his fourth term of office as leader supporting the contention that Australia is the new land of opportunity and an area for business growth. As one of the favoured destinations for immigrants, the Australian tax system is very similar to that of the UK, but there are a number of matters that need to be noted particularly where a business is being set up.

Contracts and work permits

A UK national requiring to work in Australia will require a visa, work permit and will have to adhere to the strict entry and exit requirements imposed by the Australian immigration authorities. A number of different categories apply to business visitors wishing to stay in Australia. The business visitor must only be engaged in work in Australia if the work is relevant to the conduct of the business, or performance of the tasks specified in the visa application. Any breach of conditions may lead to cancellation of the visa and possibly penalties. See www.immi.gov.au.

Choice of business vehicle

In Australia, possible choices of venture vehicle will be the proprietary company (pty) or the public company which is listed on the Australian Stock Exchange. However, alternatives to the company structure in Australia might be the partnership, sole tradership or the operation of a small business through a unit trust or discretionary trust.

Partnerships/joint ventures

A partnership in Australia is the relationship between persons carrying on a business in common with a view to profit. The partnership is formed by the parties executing the partnership agreement, although a formal agreement is not necessary because of the different partnership Acts existing in the various states of Australia. Depending on the state or territory in which the business is situated, it will apply its respective Partnership Act, e.g. Partnership Act 1892 (NSW), The Partnership Act 1891 (Queensland). This Act contains a number of statutory assumptions that apply to all general law partnerships and may not be relevant to the new partnership being set up (and may even be detrimental!). One of the assumptions is that the partners will all share in the profits equally and be taxed individually (see the Table below) but this may not be appropriate if one party has contributed a greater amount of start-up capital than the other partner(s). See Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] 131 CLR 321, 3 ALR 409.

Issue: 3980 / Categories: