If Australia’s not on your radar, it should be. This modern and stable economy – whose key sectors reflect Canadian strengths – boasts one of the world’s most transparent regulatory environments and a wealth of high-quality business opportunities.
Australia imports close to $1.8 billion in Canadian merchandise annually.
Australia has signed two trade agreements that include Canada and is part of the 12-country Trans-Pacific Partnership, which is currently awaiting ratification in Canada and other partner countries.
At year-end 2014, Canada had more than $26.4 billion in foreign direct investment in Australia.
Ready to chart a path to Australia? Start with these five market experts:
“Everything in Australia is about 10 to 15 per cent higher in price than what it is in Canada – partly a reflection of the commodities boom and the foreign exchange as well.”
Canadians often view Australia as a country and market that's very similar to Canada. How true is this assessment?
It's a mostly accurate assessment, but Canadians may find they need to adjust. If anything, Australia is more British than Canada. Australia and Canada share a lot of common business acumen and Canadians are very welcome there. But there are some things that can trip up exporters.
The rules and regulations in Australia are more rigid. You see this in the diligence they place on product safety and labelling, especially on imports. Communication of regulations is also a priority. As an example, one of the things Australians will do at the start of a business meeting is walk you through a safety demonstration: what to do in case of a fire drill, and where you’ll find the exits. In some companies you have a walk-through of intellectual property rights and what you have to do to abide by them. It’s a little different to a Canadian company to see this formalized in such a fashion, but it’s part and parcel of a meeting.
Any key advice for Canadians eyeing Australia's market?
Take a really good look at your pricing margin. Everything in Australia is about 10 to 15 per cent higher in price than what it is in Canada – partly a reflection of the commodities boom and the foreign exchange as well. We're almost dollar-to-dollar, but there are actual costs to getting goods to market that add up. Also, a Canadian company seeking to sell to Australia should consider incorporating messaging around its own best practices and standards on product safety and policies. Don’t hesitate to mention certifications that your products or company has achieved.
“If you are part of the Canadian business community, and contribute to Canada's economic growth, have a demonstrated capacity for internationalization and have good potential to add value to the Canadian economy, you can benefit from the TCS free of charge services.”
What market entry model do you typically recommend to Canadian companies?
We advise Canadian companies to establish a presence in Australia and/or establish a relationship with a local partner as a way to increase their chances of being invited to tender for a contract. Given the significant time difference between Canada and Australia, it is also important to provide on-the-ground support and after-sales service, especially in case of an emergency. So it makes sense for a company to get a partner here in the market.
What should Canadians look for in an Australian partner?
The right partner will have in-depth knowledge of the industry, be well connected and, sometimes, have the ability to service the equipment of Canadian companies. The Trade Commissioner Service can work with Canadian clients to understand their requirements and provide a short list of qualified local partners that could be a good fit. Once a partnership agreement is signed, the TCS can work with the local partner to support their business development objectives as long as their activities have a positive economic impact for Canada.
How else can the Trade Commissioner Service help?
The TCS in Australia aims to organize a number of trade and investment missions each year in collaboration with various partners such as Export Development Canada and provincial governments. We work with participating companies to understand their objectives – for example, increase market intelligence, develop business contacts, increase sales – and screen potential local partners with a view to organizing productive business-to-business meetings. For companies that are new to the market, we can also organize industry briefing sessions with service providers such as law firms, accounting firms or economic development agencies.
“IT remains a tight market while middle management employees are always in demand across all markets. The reason for this is that Australia’s system creates strong specialists, but not so many generalists.”
How would you describe Australia’s labour market?
Australia is a very fluid market where we have seen a war for talent in many industries. IT remains a tight market, while middle management employees are always in demand across all markets. The reason for this is that Australia’s system creates strong specialists, but not so many generalists. This creates a challenge for foreign companies that want to hire a generalist manager as their country manager in Australia.
Does this make it hard to employ workers here?
By registering as a business in Australia, a company would get the right to employ people locally and get a visa for an expat. This would cost only a few thousand Australian dollars. Australia is very welcoming to employers in that sense, but companies still need to ensure they have the right labour agreement, process and procedures in place.
Are there particular areas or regions that are more attractive for Canadian companies looking to bring expat employees to Australia?
Sydney and Melbourne are where expats tend to go – these are the top two spots for Canadians, and a lot of Canadian headquarters are located in Sydney. Other areas that attract a lot of Canadians are Brisbane and Perth, largely because of the mining industry. With these four cities you have the bulk of where Canadians are setting up operations and employing expats in Australia.
“Setting up a corporation in Australia can be done within a day. The only restriction is that you need at least one director who is a resident of Australia, and for a public company you need at least two.”
How would you describe Australia’s legal and regulatory environment?
Australia has a very strong and transparent legal and regulatory framework, which is very attractive to foreign companies intending to do business in Australia.
How does this regulatory framework affect setting up a business?
Yes, it does. An Australian company can be incorporated within a day once all of the requisite consents and other documentation have been received. Importantly for foreign investors, an Australian proprietary company must have at least one director who is ordinarily resident in Australia. An Australian public company must have at least three directors, two of whom are ordinarily resident in Australia, and at least one company secretary who is ordinarily resident in Australia. However, the shareholders of an Australian company do not need to be Australian.
What should exporters know before bringing goods and services to Australia?
Australian consumer laws are very robust, particularly regarding product liability and labelling. Australia also has comprehensive quarantine laws, which are especially relevant to Canadian exporters of food products.
“Canada has state and federal taxes. Here we just have one federal tax to keep things simple. So from a corporate tax perspective, where you locate your business does not make a difference.”
Any key differences between the Australian and Canadian corporate tax regimes?
Canada has state and federal taxes. Here we just have one federal tax to keep things simple. So from a corporate tax perspective, where you locate your business does not make a difference. Location does have an impact on payroll tax. Depending on the state you’re in, you pay about four to five per cent payroll tax once you reach a certain threshold in total wages. The threshold varies between each state.
Any other insights into payroll expenses?
First, employers don’t need to make any social security withdrawals from their employees’ pay cheques. The only thing you withdraw from your employees’ salaries is income tax. There is a 9.5-per cent superannuation, which is a contribution for employees’ retirement. This is compulsory and paid 100 per cent by the employer. But this is the only employer contribution required. And of course there is the payroll tax.
Are there any particular corporate structures that work better for Canadian companies?
We recommend forming a local company versus a branch office. If you set up a branch, the Australian Taxation Office requires you to send an audited report every year to show that your head office exists. If you’re a local company, you don't need to file an internal audit until you reach $25 million in annual revenue and $12.5 million in total assets on your balance sheet.