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Coming to Australia as a Business Migrant
The Australian Government welcomes business migrants and recognizes their contribution to local employment and the economy. Perth, as one of the world’s most livable and globally connected cities, has a dynamic business environment and is the home city of a third of ASX listed companies. It is also located in the same time zone as China, which is Australia’s largest trading partner and the world’s second largest economy.
If you already have a background in successfully managing or owning a business, you may qualify for a business migration visa. As a starting point, you could simply go to the Australian government website SkillSelect to conduct a self-assessment against various business visa categories.
A key business migration visa criterion is that you would either need to buy an existing Australian business or start a local business and you would need, amongst other matters, to consider which business structure would be most suitable.
There are a number of business structures that prospective business migrants could consider, including sole trader, partnership, trust or company. Choice of business structure determines what operating licenses would be needed and there are varying tax and legal implications. For the majority of business migrants, a private company would usually suit.
Once you have started a business in Australia, you would be required to pay tax to the Federal and State Governments. Taxes in Australia are collected by the Australian Taxation Office and the various State Government revenue offices. There are a range of tax concessions in Australia available to small businesses and taking advantage of these concessions can result in worthwhile savings.
Typical business taxes include company tax, capital gains tax, and goods and services tax. Businesses can elect to make tax payments monthly, quarterly or annually.
An Australian resident company is subject to company tax. The company tax rate is currently 30%, or 28.5% from the 2015/2016 income year onwards if the company is a small business with an annual aggregate turnover less than $2 million. There is no tax free threshold for companies. A resident company is taxed on both its Australian sourced income and overseas income whereas a non-resident company is only taxed on its Australian sourced income.
Capital Gains Tax (CGT) is applicable on any capital gain resulting from a disposal of assets. There are four CGT concessions available for small business entities. They are the small business 15-year exemption, the small business 50% reduction, the small business retirement exemption and the small business roll-over concession. To qualify for the concessions, business entities must satisfy a number of basic conditions. Once the conditions are satisfied, the capital gain may be disregarded entirely or halved under these concessions. For example, a capital gain that qualifies for the 15-year exemption is disregarded entirely and is not taken into account in calculating the taxpayer’s net capital gain or taxable income for the income year in which the asset was disposed.
The Goods and Services Tax is administered and collected by the Australian Taxation Office. Based on the GST provisions and visa application criteria, the majority of business migrants will need to register for GST when starting a business in Australia. As a small business, taxpayers may be eligible for the following GST concessions – accounting for GST on a cash basis, paying GST by instalments, and annual apportionment of GST input tax credits. Under the third concession, a small business entity can claim the full input tax credit for acquisitions that are partly private and partly business related in the monthly or quarterly Business Activity Statement, and make a single increasing adjustment after the end of the income year to account for the private portion of the GST.
We have only very briefly described the business migration visa, business structures and taxes. Planning ahead is important for a successful visa application and most important for the successful running of an Australian business. If you are planning to migrate to Australia on a business migration visa, then it would pay to have professional advice along the way and Munro’s is well placed to assist.