Whether you’re mapping out your business expansion to Australia or already operating down under, there are a number of key terms to know and understand, as many of these terms are unique to the Australian market, laws, and culture. Perhaps you’re registering with ASIC and the ATO to obtain your ACN and ABN… and find yourself overwhelmed with unfamiliar words and acronyms. Here are some of the most common terms defined, including those used in our free How to Expand to Australia e-book.
Important Terms & Definitions
ABN –Australian Business Number, a unique 11-digit number issued by the Australian Business Register (ABR), operated by the ATO, that identifies a business for tax and other business purposes
ACN – Australian Company Number, a unique 9-digit number issued by ASIC to registered companies
ARBN – Australian Registered Body Number, a unique 9-digit number allocated by ASIC when a body is registered with them other than as a company
BAS – Business Activity statement, a form used to report business tax entitlements and obligations including Goods and Services Tax (GST) and Pay As You Go (PAYG)
EOR – Employer of Record, refers to employment via an authorised third-party partner who will act as the local employer of staff for tax & immigration purposes
GST – Goods and Services Tax, a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia
FBT – Fringe Benefits Tax, a tax that employers must pay on certain benefits they provide to their employees (and their family or associates)
OBS – Overseas Business Sponsorship, a sponsorship licence which allows non-Australian businesses to sponsor foreign employees to work in Australia
OHLA – On-Hire Labour Agreement, a labour agreement which allows EOR providers to organise a worker’s visa sponsorship on behalf of their employer
PAYG – Pay As You Go, a system for making regular payments towards your expected annual income tax liability
PR – Permanent Residency, a type of permanent visa that is not dependent on the visa holder’s work or relationship status. This may be important when dealing with foreign employees or verifying an employee’s rights to live and work in Australia
PTY LTD – Proprietary Limited – business structure for a privately-held company that has at least one shareholder and at most 50. The liability of shareholders is limited to the value of shares.
SAP – Substitution of Accounting period. The financial year in Australia runs from 1st July to 30th June of the following calendar year. You may want to request to substitute the financial year period to match your financial year in the country of origin so that consolidation of accounts is made easier
Small business – For taxation purposes, the Australian Taxation Office defines a small business as one that has annual revenue turnover (excluding GST) of less than $2 million. For employment purposes, Fair Work Australia defines a small business as one that has less than 15 employees.
SBS – Standard Business Sponsorship, a sponsorship licence which allows Australian businesses to sponsor overseas citizens to work in highly skilled occupations
TFN – Tax File Number, a unique 8- or 9-digit identifier issued by the ATO o teach taxpaying entity in Australia
TSS [visa] – Temporary Skill Shortage visa, also known as the subclass 488 visa. This is now the most common visa for sponsored overseas employees working in Australia, as it has replaced the former 457 visa
WPN – Withholding Payer Number, a number issued to employers with PAYG withholding obligations
Common Types of Company Structures
Note: There are a number of different business structures in Australia. These are the most common options for foreign businesses looking to set up in Australia.
Representative Office – office established by a company to conduct marketing and other non-transactional operations
Branch – a local branch belonging to a foreign business that is not a separate legal entity; it is the foreign business that trades locally
Subsidiary – a separate and local legal entity associated with a parent company but independent in terms of operations. It is an Australian resident for tax purposes and has limited liability
Annual leave – entitlement for most full-time and permanent part-time Australian employees to four weeks of paid leave per year (per 12 months worked). Part-time workers receive four weeks on a pro rata basis
Personal / Sick / Carer’s leave – entitlement for all Australian employees to paid days off when the employee or their immediate family member is unwell. This covers 10 days of paid leave per year for full-time workers
Headspace Day / Mental Health Day / Health & Wellbeing Day – a day off work (generally taken as personal leave) for the employee to look after their mental or otherwise non-physical health
Modern Awards – regulations which state the conditions of work for employees in specific occupations and industries, including minimum wages, hours worked, and more. The first thing Fair Work (FWO) inspectors will check is whether you know which Modern Award applies to your employees
Payroll Tax – tax to be paid by employers in each Australian state where employees are paid
Superannuation – also known as ‘super’ for short. Australian Government system whereby money must be put aside by each Australian employer and invested in a fund for the employee’s retirement. You must nominate a default super fund as an employer as not all your employees will necessarily have their own super account. This fund must have some very specific criteria (be compliant, registered by APRA, and offer a minimum level of life insurance)
Workers’ Compensation – compulsory statutory form of insurance for all employers in every state and territory in Australia and provides protection to workers if they suffer a work-related injury or disease
Government Agencies & Organisations to Know
Meet the main agencies and entities you will deal with on a regular basis as an Australian business.
Austrade – an Australian Government initiative offering advice and guidance to foreigners looking to do business or invest in Australia
ASIC – Australian Securities and Investments Commission, the government entity that registers new businesses and organisations, acts as the Australian corporate regulator. This entity acts on a national level.
ATO – Australian Tax Office, the revenue collection body. They collect tax from businesses and individuals. ATO also supervise the superannuation system. This entity acts on a national level.
FWO – Fair Work Ombudsman, an independent statutory office whose main role is to promote harmonious and productive workplace relations and to ensure compliance with Australian workplace laws (through assessment of complaints or suspected breaches of workplace laws, awards and agreements).
OSR – The Office of State Revenue which collects revenue at a state level. This is the state agency you will register with and pay your payroll tax to (if threshold is met). There is one in each state.
TGA – Therapeutic Goods Administration, the regulatory body for therapeutic goods in Australia
Government entities representing trade & investment in Australia (on top of Austrade):
NSW Department of Industry: https://www.dpie.nsw.gov.au/
Invest Victoria: http://www.invest.vic.gov.au/
Trade and Investment Queensland: https://www.tiq.qld.gov.au/
Invest & Trade Western Australia: https://www.jtsi.wa.gov.au/
PIT (Professionals in International Trade): https://pit.org.au/resources/
Australian Financial Services License (for companies willing to provide financial/trading services in Australia): https://asic.gov.au/for-finance-professionals/afs-licensees/financial-advisers-register/
Accessibility – the inclusive practice of making websites, devices, processes or workplaces usable by people of all abilities and disabilities
Best practice – improving business operations and services by following standards, codes of practice and benchmarking
Fortnight – two weeks
Pro-rata – literally ‘at a proportional rate’, used to calculate salaries for employees who do not work full-time
Union – organisation that represents the collective interest of workers, helping them unite to negotiate with employers over wages, hours, benefits and other working conditions