Setting up a subsidiary company in Australia allows businesses to expand into a stable and well-regulated market. Australia offers strong economic growth, a skilled workforce, and access to the Asia-Pacific region.

Understanding the legal and operational requirements is critical for successful market entry. From selecting the appropriate business structure to complying with tax and employment laws, this guide covers everything you need to know about setting up a subsidiary company in Australia.

Types of Subsidiaries in Australia

When setting up a subsidiary company in Australia, you can choose from different structures with distinct legal and operational implications. The most common types include:

  1. Wholly-Owned Subsidiary – A company wholly owned and controlled by a foreign parent. It operates independently but complies with Australian laws. This structure provides complete control but requires adherence to local regulations.
  2. Joint Venture (JV) Subsidiary – Formed when a foreign company partners with an Australian business. Profits, risks, and management responsibilities are shared. This option reduces initial costs but requires clear agreements on governance.
  3. Branch Office – Not a separate legal entity but an extension of the parent company. The parent assumes all liabilities, making this a simpler but riskier option.
  4. Representative Office – Used for market research or promotional activities. It cannot engage in revenue-generating operations and has limited functions.

Understanding these subsidiary structures provides the foundation for establishing your Australian operations. Once you’ve selected the most suitable option for your business needs, the next critical phase involves navigating the step-by-step registration process to ensure full legal compliance.

Step-by-Step Guide to Setting Up a Subsidiary in Australia

If you’re exploring how to establish a subsidiary company in Australia, follow these key steps:

1. Choose a Business Structure:

Decide between a wholly-owned subsidiary, joint venture, or another model based on your operational and legal needs.

2. Register Your Company:

  • Company Name: Ensure it’s unique by checking the Australian Securities & Investments Commission (ASIC) database.
  • Legal Entity: Register as a proprietary limited company (Pty Ltd) with ASIC.
  • Australian Business Number (ABN): Apply for an ABN through the Australian Business Register.
  • Tax File Number (TFN): Obtain a TFN for tax purposes.

3. Appoint Key Personnel:

  • At least one director must reside in Australia.
  • A local public officer is required for tax compliance.

4. Comply with Tax & Legal Requirements:

  • Register for Goods and Services Tax (GST) if annual turnover exceeds AUD 75,000.
  • Understand Pay As You Go (PAYG) withholding (if hiring employees).
  • Meet workplace laws, including superannuation (pension) contributions.

5. Open a Local Bank Account:

  • An Australian business bank account is necessary for financial transactions.
  • Famous banks include: Westpac, National Australia Bank, Commonwealth Bank

6. Maintain Ongoing Compliance:

  • File annual financial statements with ASIC.
  • Renew licenses and permits as needed.

Key Benefits of Establishing a Subsidiary in Australia

When considering opening a subsidiary in Australia, businesses gain several strategic advantages. The country offers a stable economy, a transparent regulatory environment, and access to the Asia-Pacific region.

These benefits make Australia an attractive destination for foreign investment and long-term growth.

1. Access to a Stable and Growing Market: Australia offers a strong economy with consistent growth, providing opportunities across several industries. The country’s GDP grew by 2.1% in 2022-23

2. Favorable Tax Environment: Australia has double taxation agreements with over 40 countries, reducing tax burdens for international businesses.

3. Limited Liability Protection: A subsidiary operates as a separate legal entity, shielding the parent company from financial and legal risks.

4. Skilled Workforce & Business-Friendly Policies: Australia’s highly educated workforce and streamlined regulations make hiring talent and operating efficiently easier.

5. Gateway to Asia-Pacific Markets: With strong trade ties to Asia, a subsidiary in Australia can serve as a regional hub for expansion.

Essential Documents for Registering a Subsidiary in Australia

Proper documentation is critical in setting up a subsidiary company in Australia. This results in a legally compliant business incorporation. The Australian government requires specific paperwork to verify company details, ownership, and tax obligations.

When setting up a subsidiary company in Australia, you must prepare the following documents for a smooth registration process:

  • Company name reservation (if applicable)
  • Constitution or replaceable rules
  • Director/shareholder details (names, addresses, DOB)
  • Proof of ID (passport/driver’s license for residents, notarized copies for foreign directors)
  • ACN application (via ASIC)
  • ABN and TFN registration
  • GST registration (if turnover >AUD 75,000)
  • Proof of Australian business address (lease/utility bill)
  • Local public officer appointment
  • Industry licenses (AFSL, import/export permits, professional certs)

With all necessary documents prepared, the next crucial decision involves selecting the most appropriate legal structure for your Australian operations. Moving forward, this choice will determine your subsidiary’s governance framework, liability protections, and compliance obligations.

Legal Structures Available for Subsidiaries in Australia

Selecting the correct business entity is a foundational decision that impacts taxation, liability, and operational flexibility. Australia offers several incorporation options, each with distinct regulatory frameworks and financial implications. Below is a detailed breakdown:

Structure Description Liability Taxation Best For Registration Body
Proprietary Limited Company (Pty Ltd) Private company with share capital Shareholders’ liability limited 25–30% corporate tax Established businesses with growth plans ASIC
Public Company (Ltd) Can raise public capital Shareholders’ liability limited 25–30% corporate tax Large-scale enterprises ASIC
Branch Office Foreign company extension Parent company liability Taxed as foreign entity Market testing phases ASIC
Joint Venture (JV) Collaborative business arrangement Defined by JV agreement Partners taxed individually Strategic partnerships ASIC (if incorporated)
Trust Trustee manages assets for beneficiaries Varies by structure Flow-through taxation Asset protection strategies ASIC (if corporate trustee)

Experts at Commenda analyze your business objectives, risk tolerance, and expansion strategy to recommend the optimal subsidiary structure. We handle the legal and tax implications so you can focus on growing your Australian operations with confidence. Talk to us today. ‍

Taxation Rules and Incentives for Subsidiaries in Australia

Australia’s tax system offers competitive rates and specific incentives for foreign-owned subsidiaries. Understanding these provisions helps optimize your tax position setting up a subsidiary company in australia

Corporate Tax Rates

  • Standard rate: 30% for companies with annual turnover exceeding AUD 50 million
  • Reduced rate: 25% for small and medium enterprises (turnover below AUD 50 million)

Key Tax Incentives

  1. Research & Development (R&D) Tax Incentive
    • 43.5% refundable tax offset for eligible R&D expenditures
    • This requires registration with AusIndustry
  2. Instant Asset Write-Off: Temporary full expensing for eligible business assets (thresholds vary by fiscal year)
  3. Export Market Development Grant (EMDG): Reimburses up to 50% of export promotion costs (capped at AUD 150,000)

Tax Compliance Requirements

  • Monthly/Quarterly PAYG Installments: For companies with AUD 1 million+ annual turnover
  • Annual Financial Statements: Must be lodged with ASIC
  • Transfer Pricing Documentation: CbCr is required for large multinational groups with over AUD 1 billion in annual global income. 

Regulatory and Compliance Requirements for Subsidiaries in Australia

If you are considering setting up a subsidiary company in Australia, it requires adherence to strict ongoing obligations across multiple regulatory areas. Failure to comply can result in penalties or legal consequences.

1. Corporate Compliance

  • Annual Review Fee: Payable to ASIC for company registration maintenance
  • Director Updates: Notify ASIC within 28 days of any changes to directors/shareholders

2. Tax Obligations

  • BAS Lodgement: Monthly/quarterly Business Activity Statements for GST-registered entities
  • Annual Tax Return: Due 15 months after registration or 31 October for existing entities
  • FBT Returns: For companies providing employee benefits exceeding $2,000 annually
  • Superannuation Guarantee: Minimum 11% employer contributions (increasing to 12% by 2025)

3. Employment Regulations

  • Fair Work Act Compliance: Including modern awards, minimum wages ($24.10/hour as of 2024), and working conditions
  • Workplace Safety: Mandatory WorkCover insurance and OHS compliance
  • Payroll Reporting: Single Touch Payroll (STP) submissions for each pay cycle

Do You Need a Physical Address for a Subsidiary in Australia?

Australian corporate law mandates specific location requirements for business registration that differ from many other jurisdictions. These rules ensure proper service of legal documents and maintain transparency in business operations.

When setting up a subsidiary company in Australia, you must provide a registered office address that meets strict requirements under Australian law. Here are the key considerations:

Registered Office Requirements

  • Must be a physical address in Australia (PO boxes alone are insufficient)
  • Must be accessible to the public during standard business hours for document service
  • Must display the company name visibly if different from the office building name

Alternative solutions include: Commercial office leases for full compliance, virtual offices with legal addresses and mail handling (must be publicly accessible), registered office services through accountants/lawyers, and flexible co-working spaces that meet all regulatory requirements while offering scalable amenities.

Important Note: When setting up a subsidiary company in Australia, the address will be publicly listed on the ASIC register. Many international companies use their Australian advisor’s address during the initial setup.

Operational Setup for a Subsidiary in Australia

Establishing efficient operations is critical for your Australian subsidiary’s success. You must carefully plan staffing, infrastructure, and daily management to ensure compliance and smooth functioning.

For staffing, Australian labor laws require strict adherence to the Fair Work Act 2009, including minimum wage standards and modern awards. As of 2024, the minimum wage stands at AUD $24.10 per hour. Employers must also make mandatory superannuation contributions, currently set at 11% of employee earnings and increasing to 12% by 2025. 

If you plan to bring in foreign workers, you must navigate sponsorship visas like the TSS or skilled visas while ensuring proper PAYG tax withholding and Single Touch Payroll reporting. Your subsidiary requires a registered physical address and WHS-compliant workspace.

Technology must adhere to the Privacy Act 1988, potentially needing local servers for sensitive data. Financially, establish AUD accounts (HSBC, CommBank, NAB) and file monthly BAS statements. Large entities need annual audits.

Industry rules vary: Financial services require AFSL/APRA compliance, while retailers/manufacturers must follow Consumer Law.

With operational foundations established, setting up your financial systems begins with opening a corporate bank account, which is critical for all subsequent business transactions.

How to Open a Business Bank Account for a Subsidiary in Australia?

Opening a corporate bank account is critical in establishing your Australian subsidiary’s financial operations. The process requires careful preparation of documents and an understanding of banking requirements. Below is a simple step-by-step process:

  1. Select a bank: Compare major Australian banks (Commonwealth, ANZ, NAB, Westpac) and international options. Consider fees and services.
  2. Prepare documents:
    • ACN/ABN certificates
    • ASIC incorporation certificate
    • Company constitution
    • Director IDs (passport/driver’s license)
    • Proof of business address
  3. Submit application: Online with possible in-person verification. Be ready to explain business activities.
  4. Fund the account: Deposit opening amount (varies by bank).
  5. Activate services: Set up online banking, cards, and payment solutions.

Is an Operating Agreement Necessary for a Subsidiary?

An operating agreement is essential when establishing a subsidiary in Australia, particularly for proprietary limited companies (Pty Ltd) with multiple shareholders or complex ownership structures. While not legally mandatory, this document defines management roles, profit distribution, decision-making processes, and dispute-resolution mechanisms.

It becomes crucial when foreign parent companies must outline control parameters or joint ventures require clear operational guidelines. The agreement helps prevent conflicts, ensures compliance with Australian corporate law, and protects shareholders’ interests. A simpler version may suffice for wholly-owned subsidiaries, but professional drafting is recommended to align with ASIC requirements and the Corporations Act 2001.

Economic Overview and Business Environment in Australia

Australia offers a stable, high-growth economy with a GDP of AUD 1.78 trillion (2024) and an initial estimate of $1.818 trillion for 2025. Key sectors include mining (12.2% of GDP), financial services (7.5%), and technology (expanding at 6% yearly).

Foreign direct investment reached AUD 4.7 trillion in 2023, with opportunities in renewable energy, critical minerals, and healthcare innovation. The World Bank ranks Australia 14th for ease of business (2023), featuring strong legal protections and skilled labor.

Opening a Branch vs. a Subsidiary: What’s the Difference?

Choosing between establishing a branch or subsidiary in Australia involves critical legal and financial considerations. The right choice depends on your company’s risk tolerance, expansion goals, and long-term plans for the Australian market.

Key differences include:

Aspect Branch Office Subsidiary (Pty Ltd)
Legal Status Not a separate legal entity; extension of parent company Separate legal entity under Australian law
Liability Parent company bears full liability Limited to the subsidiary’s assets
Taxation Taxed as part of parent company (no double taxation if DTA applies) Subject to Australian corporate tax (30%)
Registration Must register as a foreign company with ASIC Incorporated as an Australian company (ASIC)
Compliance Must file parent company’s financials with ASIC Local financial reporting required
Operational Control Directly managed by parent company Independent management structure possible
Setup Complexity Faster to establish Requires full company registration

How Commenda Can Help You Expand in Australia?

Establishing a subsidiary in Australia involves navigating complex legal, tax, and operational requirements that can challenge even experienced businesses. Commenda specializes in simplifying this expansion process through comprehensive support tailored to international companies.

Our team manages every aspect of your market entry, from initial company registration with ASIC to securing necessary tax identifiers and selecting the optimal legal structure. We provide strategic guidance on tax compliance, helping you leverage available incentives while meeting all obligations.

For operational readiness, we assist with critical steps like opening local bank accounts, establishing payroll systems, and ensuring employment compliance. Beyond setup, we offer ongoing support for annual filings, financial reporting, and regulatory updates. With Commenda as your partner, you gain local expertise that minimizes risks and accelerates your Australian market entry.

Take the first step toward successful expansion—schedule your free demo with Commenda today to discuss your Australian subsidiary needs.

Frequently Asked Questions (FAQ’s)

Q. How long does it take to register a subsidiary in Australia?

Standard ASIC processing takes 1–3 business days once documents are submitted. A full operational setup (banking, tax registrations) usually takes 2–4 weeks.

Q. Can a foreigner fully own a subsidiary in Australia?

Yes, Australia allows 100% foreign ownership of subsidiaries, except in restricted sectors like defence or media (FIRB approval may be required).

Q. What are the common challenges when opening a subsidiary in Australia?

  • Complex tax compliance (GST, PAYG, superannuation)
  • Local director requirement (at least one must reside in Australia)
  • Strict employment laws (awards, minimum wage, unfair dismissal protections)

Q. Do subsidiaries in Australia need a local director or representative?

Yes, Pty Ltd companies must appoint at least one director who is ordinarily a resident of Australia. Public companies need three directors, with two residents.

Q. What are the annual compliance requirements for subsidiaries in Australia?

  • Financial statements: Lodged with ASIC (audited if large proprietary company)
  • Tax returns: Due 15 months after registration
  • BAS/GST filings: Monthly/quarterly for GST-registered businesses
  • Learn more about the ASIC annual review fee here.

Q. Can a subsidiary hire employees directly in Australia?

Yes, but must comply with:

  • Fair Work Act (minimum wage, awards, superannuation)
  • Single Touch Payroll (real-time wage reporting to ATO)

Q. What happens if a subsidiary fails to meet compliance rules in Australia?

Penalties include:

  • ASIC fines (learn more here)
  • Director disqualification
  • Legal action for tax non-compliance