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Business in Australia

Setting Up a Business in Australia. Legal Landscape.

Australia is a great place for business. However, like in any other country, there are things you need to know about doing business onshore.

This article outlines the legal landscape for business in Australi a, emphasising key aspects of Corporate Law, Competition Law, Consumer Protection, Employment Law, and Intellectual Property. You can read the ‘How to Set up a Business in Australia’ full article here. You can download the complete BridgePoint Doing Business in Australia Guide here.

Corporate Law

The Corporations Act 2001 (Cth) is the main legislation that regulates all corporations in Australia. It outlines the procedures for the creation, management, and dissolution of companies, as well as the responsibilities of directors and other officers. The Act also covers a broad range of other topics, such as financial reporting, takeovers, and mergers. Some of the main features of the Corporations Act 2001 are:

Company Formation
This act lays down the groundwork for establishing a company in Australia. It defines the prerequisites, like the minimum number of shareholders, the necessity for a registered office, and the appointment of directors.

Corporate Management
It outlines the powers and duties of directors and other company officers. Additionally, it sets rules for general meetings, shareholder voting procedures, and dividend distribution.

Financial Reporting
The Act mandates companies to prepare and submit various financial reports, including annual and half-yearly reports, profit and loss statements, ensuring transparency and accountability.

Takeovers and Mergers
Regulations for takeovers and mergers fall under this Act, emphasising the need for shareholder approval and the standards for disclosure and transparency throughout these processes.

Company dissolution
When it comes to winding up a company, this act dictates the necessary procedures, such as appointing liquidators and distributing assets among creditors and shareholders.

Obligations of Directors:

Duty of Care and Diligence: Directors are expected to exercise reasonable care and diligence in their decision-making processes.
Acting in Good Faith: They must act in the best interests of the company and its shareholders, showing utmost good faith in their actions.
Avoid Conflict of Interest: Directors are obliged to steer clear of any conflicts between their personal interests and their duties to the company.
Disclosure of Personal Interests: Any personal interests that could significantly impact the company’s affairs must be disclosed by the directors.

Competition Law

The Competition and Consumer Act 2010 (CCA) is the main source of Australia’s competition laws, which are similar to those in North America and Europe. The CCA regulates the conduct of businesses and individuals to promote fair and effective competition in the Australian market.

The Australian Competition and Consumer Commission (ACCC) is the agency responsible for administering and enforcing the CCA. The CCA contains a number of provisions that are designed to promote competition and protect consumers.

Penalties for violating competition law are severe, with fines. For some offences by companies, up to a maximum of $10 million, 3 times the contravention gain or 10% of the Australian business group’s annual turnover in the previous 12 months; and for individuals for some offences, up to $500,000. Here are some of the key prohibitions of the CCA:

Cartel conduct
Cartel conduct is the most serious form of anti-competitive conduct. It involves businesses colluding with each other to fix prices, rig bids, share markets, or control output. Cartel conduct can harm consumers by leading to higher prices, lower quality products and services, and less choice.

Misuse of market power
Businesses with a substantial degree of market power have a special responsibility to not use that power in a way that is anti-competitive. This includes not engaging in predatory pricing, exclusive dealing, or refusals to supply.

Misleading or deceptive conduct
Businesses must not engage in misleading or deceptive conduct in relation to the supply or acquisition of goods or services. This includes making false or misleading statements, engaging in bait and switch tactics, and using unfair terms and conditions.

Unconscionable conduct
Businesses must not engage in unconscionable conduct. This means that they must not exploit a special advantage or vulnerability of a consumer to the detriment of that consumer. Unconscionable conduct can include taking advantage of a consumer’s lack of understanding, taking advantage of a consumer’s financial situation, or using high-pressure sales tactics.

Product safety
Businesses must not supply unsafe goods or services. This includes goods that do not comply with safety standards, goods that are defective, and goods that are not fit for the purpose for which they are sold.

Price discrimination
Businesses must not engage in price discrimination. This means that they must not charge different prices for the same goods or services to different customers unless there is a reasonable justification for doing so.

Restricted horizontal agreements
Restricted horizontal agreements are agreements between businesses at the same level of the supply chain that may restrict competition. Examples of restricted horizontal agreements include agreements to fix prices, share markets, or limit output.

Restricted vertical agreements
Restricted vertical agreements are agreements between businesses at different levels of the supply chain that may restrict competition. Examples of restricted vertical agreements include agreements to fix resale prices, limit output, or grant exclusive territories.

Resale price maintenance
Resale price maintenance (RPM) is the practice of a supplier imposing a minimum price on its customers for the resale of its goods or services. RPM can harm consumers by leading to higher prices and less choice.

Refusal to supply
A business with a substantial degree of market power must not refuse to supply goods or services to another business if that refusal would be likely to substantially lessen competition.

Exclusive dealing
A business with a substantial degree of market power must not enter into an exclusive dealing arrangement with another business if that arrangement would be likely to substantially lessen competition.

Predatory pricing
Predatory pricing is the practice of charging a price that is below cost for a prolonged period with the intention of driving competitors out of the market. It can harm consumers by leading to higher prices in the long run.

Consumer Protection

The Australian Consumer Law (ACL) is a part of the CCA that regulates consumer rights and obligations in Australia. It is the single and national law, applied in all states and territories, although additional consumer protection and fair-trading laws in each state and territory may vary from one jurisdiction to another.

The ACL covers issues such as unfair contract terms in standard form contracts, statutory ‘guarantees’ for goods and services supplied to ‘consumers’ and product safety standards. The ACL also contains a number of provisions that are designed to protect consumers and promote fair trading. Here are some of the key prohibitions of the ACL:

Unsafe products
Businesses must not supply unsafe goods or services. This includes goods that do not comply with safety standards, goods that are defective, and goods that are not fit for the purpose for which they are sold.

False or misleading representations
Businesses must not make false or misleading representations about goods or services. This includes making false or misleading statements about the price, quality, or performance of goods or services.

Component pricing
Businesses must not engage in component pricing. This means that they must not break down the price of a good or service into its individual components and charge separately for each component.

Unsolicited supplies
Businesses must not send unsolicited goods or services to consumers. This includes sending goods or services to consumers who have not requested them, or who have requested them to be stopped.

False or misleading country of origin claims
Businesses must not make false or misleading claims about the country of origin of goods or services. This includes claiming that a good or service is made in Australia when it is not.

Pyramid selling
Businesses must not engage in pyramid selling. This is a type of selling where consumers are encouraged to recruit new participants into the scheme in order to earn money, rather than from the sale of goods or services.

Lay-by agreements
Businesses must not enter into lay-by agreements with consumers that are unfair or unconscionable. This includes agreements with unreasonable lay-by periods, excessive lay-by fees, or unfair forfeiture provisions.

Repair and replacement
Businesses must provide consumers with a repair or replacement for goods that are defective or do not comply with the guarantee. The consumer is entitled to choose which remedy they prefer.

Refunds
Consumers are entitled to a refund for goods that are defective or do not comply with the guarantee if they are unable to be repaired or replaced. The refund must be provided within a reasonable time.

Compensation
Consumers may be entitled to compensation for losses they have suffered as a result of defective or non-compliant goods or services. This may include compensation for the cost of repairs, replacement, or the purchase of a new product, as well as for any other losses incurred.

Employment Law

The Fair Work Act (2009) is the name of the federal legislation that regulates the employment relationship in Australia (except for private sector employers and employees in Western Australia). The Fair Work Act covers matters such as minimum wages, unfair dismissal, industrial action, enterprise bargaining and workplace rights and obligations.

According to the Fair Work Act, the minimum employment terms and conditions in Australia enforces the following:

Maximum Weekly Hours
An employee’s ordinary hours of work must not exceed 38 hours per week, averaged over a 52-week period. However, there are some exceptions to this rule, such as for employees who work in certain industries or who work irregular hours.

Requests for Flexible Working Arrangements
Employees have the right to request a flexible working arrangement from their employer. The employer must consider the request seriously and give reasons if they refuse it.

Offers and Requests to Convert from Casual to Permanent Employment
Employees who have worked for their employer for at least 12 months as a casual employee have the right to request to convert to permanent employment. The employer must consider the request seriously and give reasons if they refuse it.

Parental Leave and Related Entitlements
Employees who are primary carers of a child are entitled to take parental leave from their employer. Parental leave can be taken for up to 12 months, and employees can choose to take it all at once or in blocks.

Annual Leave
Employees are entitled to at least four weeks of paid annual leave per year. Annual leave must be accrued at a rate of at least 9.57% of the employee’s ordinary earnings.

Community Service Leave
Employees are entitled to take community service leave to volunteer for emergency services or to participate in jury duty. Community service leave can be taken for up to 15 days per year.

Personal/Carer’s Leave, Compassionate Leave and Family and Domestic Violence Leave
Employees are entitled to take personal/carer’s leave, compassionate leave, and family and domestic violence leave. Personal/carer’s leave can be taken for up to 10 days per year for illness or injury, and compassionate leave can be taken for up to two days per year for bereavement. Family and domestic violence leave can be taken for up to five days per year.

Long Service Leave
Employees who have worked for their employer for at least 10 years are entitled to take long service leave. Long service leave can be taken for up to 13 weeks, and employees can choose to take it all at once or in blocks.

Public Holidays
Employees are entitled to be paid for all public holidays that occur on a day they would normally be working.

Notice of Termination and Redundancy Pay
Employees must be given a certain amount of notice of termination depending on their length of service. Redundancy pay is also payable to employees who are made redundant.

Fair Work Information Statement and Casual Employment Information Statement
Employers must provide all employees with a Fair Work Information Statement (FWIS) and casual employees with a Casual Employment Information Statement (CEIS). The FWIS and CEIS outline the employee’s rights and entitlements under the Fair Work Act.

Intellectual Property

Australia’s legislation offers extensive safeguards for intellectual property, encompassing copyright, patents for inventions, trade names and trademarks, domain names, trade secrets, confidential information, and registered designs.

These laws align with Australia’s international trade and treaty obligations, exemplified by compliance with agreements such as the General Agreement on Tariffs and Trade and the TRIPS Agreement. Moreover, they have undergone adjustments following the free trade agreement between Australia and the USA.

The regulation of intellectual property rights in Australia predominantly occurs through provisions outlined in Acts like the Copyright Act 1968 (Cth), Patents Act 1990 (Cth), Trade Marks Act 1995 (Cth), Designs Act 2003 (Cth), Plant Breeder’s Rights Act 1994 (Cth), and Circuit Layouts Act 1989 (Cth).

Trade Marks

Patents

Australia belongs to the Patent Cooperation Treaty (PCT), which provides a system for obtaining patent protection in multiple countries. The Patents Act 1990 (Cth) governs the patent system in Australia and IP Australia’s Patents Office is responsible for administering it. The Standard Patents in Australia have a maximum duration of 20 years (or 25 years for a pharmaceutical patent). An innovation patent has a shorter term of up to eight years from the date of the patent. However, this type of patent is being phased out by the Australian Government. Existing innovation patents will remain valid until they expire on 24 of August 2029. No matter the type of patent, the invention must be disclosed in a specification that describes the invention and ends with claims that define the scope of the patent monopoly. The invention must be new and qualify as a manner of manufacture in the legal sense. The invention must also have an inventive step. The specification must be clear and not vague and the claims fully supported by the information in the specification.

Design

The Designs Act 2003 is a law that protects the appearance of products. For a period of up to 10 years, the law provides an Australian subsidiary exclusive rights to use, manufacture, and sell the design in Australia and legal protection against businesses that infringe their design. Businesses can register their designs with IP Australia, the Australian government agency responsible for administering IP rights in Australia. The application process is relatively simple and can be done online. Any company that owns a registered design must mark products with the design registration number.

Copyrights

The Copyright Act 1968 (Cth) grants exclusive rights for specified actions concerning works and other subject matter throughout the duration of copyright in Australia. Unlike patents or trademarks, copyright doesn’t require registration; it automatically exists in qualifying works or subject matter. Australia, being a signatory to the Berne Convention and Universal Copyright Convention, reciprocates recognition of copyright from other signatory nations. Overseas works are regulated through the Copyright (International Protection) Regulations 1969 (Cth).

For copyright protection, the work must be original and in a material form. Originality implies human authorship and a degree of skill and labour in creating the work. Other subject matter must be original, not a direct copy of a prior recording, film, broadcast, or edition. Upon meeting these criteria, copyright automatically vests in the owner, who can transfer rights except for moral rights, which are personal and non-assignable. Copyright in Australia generally persists until 70 years after the author’s death, except for TV and sound broadcasts (50 years from the first broadcast), Sound recordings and films (70 years from publication) and Published editions of works (25 years from publication).

Circuit Layout Rights

The Circuit Layouts Act 1989 (Cth) safeguards the original designs of circuit layouts, defining these layouts as the specific patterns of electronic components and connections within integrated circuits. This Act establishes a framework allowing businesses to safeguard their circuit layouts and outlines the rights and responsibilities of layout owners. A circuit layout receives protection only if it’s original and holds a connection with Australia or a foreign country specified in the Act’s Regulations. The originality criteria are higher than copyright law but lower than designs law, demanding a creative contribution by the maker and a layout that isn’t commonplace at its creation. When protected under the Circuit Layouts Act, the owner gains exclusive rights to copy the layout in material form, manufacture an integrated circuit based on the layout or a copy, and commercially exploit the layout within Australia. The rights regarding eligible layouts last for a term of up 20 years.

Plant Breeder’s Rights

The Plant Breeder’s Rights Act 1994 (Cth) is a law that protects the original varieties of plants and fungi. It provides a framework for businesses to register and protect their plant varieties, and it also sets out the rights and obligations of plant breeder’s rights owners. By registering a plant variety, the owner has the exclusive right to produce, reproduce, propagate, import, and sell the plant variety in Australia. This means that other businesses cannot exploit the registered plant variety without the permission of the owner. The Act also allows for the owner to protect derivative plant varieties that are based on the original variety. Plant breeder’s rights typically last for 20 years for trees and vines, and 25 years for other plants.

Superannuation Guarantee Charge

The Superannuation Guarantee Charge (SGC) is a penalty imposed on employers who fail to pay their employees’ Superannuation Guarantee contributions on time and in full. The consequences of not paying super to employees can be severe, both financially and reputationally. Businesses should take all necessary steps to ensure that they are complying with their SG obligations. The SGC is calculated as follows:

Shortfall amount: The amount of Superannuation Guarantee contributions that were not paid or paid late.
Interest: 10% per annum on the shortfall amount, calculated from the due date of the SG contributions to the date of payment of the Superannuation Guarantee Charge.
Admiration: $200 per Superannuation Guarantee Charge statement.

The Superannuation Guarantee Charge (SGC) is not tax deductible, which means that businesses cannot claim it as a business expense. This can significantly increase the cost of non-compliance with SG obligations. In addition to the SGC, businesses who do not pay Superannuation to their employees may also face other penalties, including:

Penalty 7: A penalty of up to 200% of the SGC.
Tax evasion prosecution: Criminal charges for tax evasion, which can result in imprisonment.

Doing Business in Australia with BridgePoint Group

We offer a comprehensive solution. From corporate structuring and tax advice, employing and remunerating staff, local representation to maintaining systems of control and reporting. We help you to successfully navigate the regulatory and operational landscape. We are familiar with Standard Business Reporting (SBR); Significant Global Entities (SGEs); Country-by-Country Reporting (CbC); Transfer Pricing; Thin Capitalisation; Single Touch Payroll (STP) and Director Identification Numbers.

We provide advice in respect of the Corporations Act, Trade Practices Act, National Employment Standards, Fair Work Act, Trade Marks Act, Privacy Act and the various State and Federal acts relating to taxation including Income Tax, Capital Gains Tax, Payroll Tax, Land Tax, Goods and Services Tax (GST) and the requirements to withhold tax from payment of dividends, interest and royalties.
We regularly interact with the Australian Taxation Office (ATO), Australian Securities and Investment Commission (ASIC), the Foreign Investment Review Board (FIRB), the Australian Competition & Consumer Commission (ACCC) and various State Revenue Offices around the country.

What makes us different

One stop shop
We offer a comprehensive and holistic approach to supporting international companies – including Significant Global Entities (SGEs) – in their expansion efforts, ensuring a smooth entry into the Australian market whilst carefully navigating the complexities of local regulations and business practices.

Local Knowledge and Market Insights
Venturing into a new market abroad can entail considerable expenses, time, and risks. Our dedication to clients extends beyond offering accounting and regulatory services. We provide comprehensive support by offering market insights and local assessments, empowering you to make well-informed decisions.

Unique Method
We employ a team-based, cross-functional approach to ensure you get the full benefit of our collective capability.

Results-Driven
We partner with our clients with an owner’s mentality.

Commercial Acumen
We understand the drivers of your success and help you to tackle the things that make the difference.

Broad Capabilities
We have a diverse team of highly trained experts selected to support every stage of your business journey.

What to expect from us

A highly experienced team that will tell you everything you need to know about doing business in Australia.
Clarity about obligations when employing and paying people in Australia including PAYG withholding, reporting, payment, superannuation and workers’ compensation insurance.
Corporate structuring advice and establishment.
Taxation advice and registration including ABN, TFN, FBT, Payroll tax, PAYGW and GST.
Opening a local bank account.
Local knowledge and representation including directorship, ATO, ASIC and OSR agency.
Advice regarding the Tax Act, Corporations Act, Trade Practices Act, Privacy Act.
Selection of compliant accounting software.
Preparation of management reporting packs.
Ongoing advice and support including pro-active communication.

We assist overseas headquartered companies to achieve a smooth entry into the Australian market whilst carefully navigating the complexities of Australia’s legal, regulatory and commercial environment. Our services are built on the strong foundation of a deep understanding of the numbers, with accounting, finance and business strategy at the core.

If you would like legal assistance in setting a business in Australian, or to find out more about the benefits of doing business in Australia with BridgePoint Group, download the complete Doing Business In Australia Guide here or contact us directly.

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Mitchell Turnbull

DIRECTOR

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