If a foreign company establishes a business within Australia to manage their domestic operations, this is known as a Proprietary Limited Company (Pty Ltd). This means that they can operate as any other Australian Pty Ltd company.

The greatest advantage of a Pty Ltd is that other Australian entities often prefer interacting with Pty Ltd’s over Registered Foreign Companies.

To incorporate a Proprietary Company, there are 2 key steps you must take.

01. Choose a name for your company
When choosing your company name, you must first ensure your preferred name has not already been taken. This can be done by completing a name search through the corporate regulator, ASIC – ABA Bioscience Consulting will do this for you.

02. Apply for registration as an Australian company.
ABA Bioscience will request required information from you, including but not limited to the below:

• Details of directors and secretaries
• Consent for appointment from directors and secretaries
• Details of the shareholders and share structure
• Details of holding companies - if applicable

Post-incorporation, there are a number of additional tasks to be completed. These include:

• Applying for an Australian Business Number (ABN)
• Applying for a Tax File Number (TFN)
• Applying for Goods & Services Tax (GST) - if applicable
• Maintaining a number of statutory company registers
• Nominating a Public Officer with the Australian Taxation Office (ATO)
• Opening a dedicated bank account

Please note that the tasks listed above are general, minimum requirements. ABA Bioscience Consulting will work with you in relation to other relevant items depending on your circumstances.

An Australian Business Number (ABN) is a unique identifying number for business names and companies and is also used for a range of tax and other business purposes.

Your ABN is issued by the Australian Business Register and generally includes your ACN with a two-digit prefix.

Using your ABN, you will be able to:

• Confirm your business identity
• Avoid Pay As You Go (PAYG) tax on payments you receive
• Claim Goods and Services Tax (GST) credits
• Claim energy grants credits
• Obtain an Australian domain name

An Australian Company Number (ACN) is a unique identifying number issued upon registration of your company. This number must be displayed on all company documents and can be obtained through ASIC.

A Tax File Number (TFN) is a unique identifying number issued by the Australian Taxation Office and is an important element of starting a business. This is because any business that trades (or intends to trade) will need a TFN

We will obtain your Tax File Number (TFN) when applying for your Australian Business Number (ABN) through the Australian Business Register.

As an Australian company, you are required to maintain financial records and registers of both financial and administrative transactions.

Depending on the size of your company, you may also be required to create financial reports on an annual basis.

Even if your company is owned in entirety by foreign subsidiaries, you will still be expected to meet these requirements unless otherwise specified by ASIC.

You also have an obligation to notify ASIC of any changes to the following:

• Company name - notify within 14 days
• Company details - notify within 28 days
• Company constitution - notify within 28 days
• Directors’ details - notify within 28 days
• Share structure or shareholder details - notify within 28 days

Please note that the list is general. ABA Bioscience Consulting will work with you to ensure all your reporting requirements are met.

ABA Bioscience Consulting specialise in assisting offshore companies to establish a business presence in Australia. We work with you to remove the complexities of navigating a new jurisdiction so you can focus on what matters most.

We have established an efficient process that ensures your Australian entity will be fully operational within a number of weeks from providing us with all required information. See Your Journey for more information.

The Research and Development (R&D) Tax Incentive is an Australian Government initiative supporting Australian based businesses to create or develop new or improved products, systems and original solutions.

R&D helps to boost competitiveness and improve productivity across the Australian economy, while the R&D Tax Incentive provides a targeted tax offset to encourage companies to engage in R&D in Australia.

There are 2 tiers of benefit for the R&D Tax Incentive.

To be eligible for the 43.5% refundable tax offset, your company group must have an annual aggregated turnover of less than $20 million AUD and an annual R&D expenditure of at least $20,000 AUD.

If your company group has an annual aggregated turnover of more than $20 million AUD and annual R&D expenditure of at least $20,000 AUD, you may be eligible for the 38.5% non-refundable tax offset, rather than the cash refund.

To be eligible for either tier, your company must also be either:

• incorporated in Australia
• incorporated in another country but be an Australian resident for tax purposes, or
• incorporated in a country with which Australia has a double tax agreement and undertake R&D activities through a permanent establishment in Australia.

Aggregated group turnover is the total annual turnover of the Australian subsidiary, any entity connected with the R&D entity in Australia or overseas and any affiliated entity in Australia or overseas.

It should be noted that any dealings between these entities will be excluded. Annual turnover is the sum of ordinary income generated in the ordinary course of business activities throughout the year, inclusive of sales and license fee revenue but exclusive of capital raised.

Entities are considered to be grouped in either of the following circumstances:

• Either entity controls the other
• Both entities are controlled by the same separate entity

An entity is said to control another if either of the following conditions applies to the entity, its affiliates or both:

• The entity owns or has the right to acquire ownership of interests in the other entity that carry between them the right to receive 40% or more of any distribution of income, capital or net income of the partnership if the other entity is a partnership
• If the entity is a company, they own or have the right to acquire the ownership of interests in the company with at least 40% of voting power in the company

Yes. Eligible R&D activities must be registered with AusIndustry within 10 months of the end of financial year in which they were undertaken in order to claim the R&D Tax Incentive benefit on eligible R&D expenditure.

The team at ABA Bioscience Consulting are specialists in this field and can work with you to identify eligible activities and relevant expenditure that can be included in your R&D Tax claim.

Legislative criteria stipulate a minimum annual spend of $20,000 on eligible R&D expenditure in order to claim the R&D Tax Incentive.

The maximum claimable amount is $100 million AUD of eligible R&D expenditure per annum for an R&D entity.

Yes, although to claim expenditure on R&D activities conducted outside Australia you must first obtain a ruling called an Advanced/Overseas Finding.

The process of obtaining an overseas finding is quite tedious and lengthy however absolutely worthwhile when there are activities of significant value conducted outside of Australia. These activities must have a direct scientific link to eligible Australian research and clinical trial activities (core R&D activities) and cannot be undertaken in Australia for reasons such as legislation, lack of Australian capability, or lack of access to a population of living things. This process could be applied to some preclinical work, such as toxicology studies, drug formulation activities or even some clinical studies conducted in parallel with Australian research studies.

There are several conditions that must be met in order for a successful ruling to be awarded, allowing your activities conducted outside Australia to be claimed under the R&D Tax Incentive.

01. The activities must be covered by an advance/overseas finding stating that the activities are eligible.

02. The activities must have a significant scientific link to one or more ‘Australian core activities’ registered or reasonably likely to be conducted and registered.

03. The activities must be unable to be conducted within Australia because of one or more of the reasons listed below:

• conducting the activity requires access to a facility, expertise or equipment not available in Australia;
• conducting the activity in Australia would contravene a law relating to quarantine;
• conducting the activity requires access to a population (of living things) not available in Australia; or
• conducting the activity requires access to a geographical or geological feature not available in Australia.

Expenditure on activities conducted overseas must not exceed expenditure on certain Australian activities.

If your company has a tax loss at the end of the income year, no tax is payable. Instead, your losses will be carried forward into future years to offset against your future profits. When your losses have been absorbed by your profits, you will then be required to pay tax.

By claiming the R&D Tax Incentive, you can essentially cash out your losses at a rate of 43.5% of eligible R&D expenditure instead of carrying them forward.

The amount you will be eligible to receive as a cash refund depends on the amount of R&D expenditure your business has and the magnitude of the losses; tax losses must be equal to or greater than R&D expenditure to claim the full 43.5%.

If your R&D expenditure is large and you make a small profit, you will still be able to claim a sizeable refund.

The subsidiary must be financed through either loans or capital. While capital is favoured, neither avenue is classified as taxable income.

Essentially, the parent funds the R&D activities in Australia by way of loans or capital. If the R&D expenditure is deductible under the R&D Tax Incentive scheme, but there is no income to offset the expenses, a tax loss will be generated in the Australian entity.

To start with, the overseas parent can fund R&D expenses on behalf of the subsidiary. However, the Australian subsidiary is required to incur the expenditure and reimburse/pay the parent for these expenses (by way of cash transaction or constructive payment) prior to the end of the claim year to receive the R&D tax benefit on that expenditure.

If this payment is not processed in the year of the R&D claim, the additional R&D benefit is not available until the income year in which the payment is made.

Yes. Intellectual property may be owned by an overseas company while still being eligible for the R&D Tax Incentive.

In this instance, it’s even more important for the company applying for the R&D Tax Incentive to be aware of international tax obligations and transfer pricing issues.

This is a complicated facet of the R&D Tax Incentive so it is recommended that you discuss this further with ABA Bioscience Consulting.

To be eligible under the R&D Tax Incentive scheme, expenditure must be spent on eligible R&D activities. Some of the most common eligible R&D expenses include things like research materials, drug products, TGA fees, project management, investigator and site payments and specific insurance costs.

Get in touch with ABA Bioscience Consulting to learn more about the specific claimable expenses relevant to your research.

If your company has an aggregated turnover of less than $20 million, you may be able to transfer the 43.5% tax benefit into a cash rebate. This is particularly beneficial for companies experiencing significant tax losses in Australia as it provides a significant cash flow advantage in order to fund future R&D activities.

According to Section 201B of the Corporations Act 2001, a director can be any individual who:

• Is at least 18 years of age
• Is not disqualified from managing corporations, unless leave is granted by ASIC (under s206F(5)) or by a court (under s206G)

This includes foreigners, so long as they meet the above requirements.

No, all Proprietary Limited companies are required to have at least one director who primarily resides in Australia.

This is dependent on a number of factors. For good corporate governance, it is strongly recommended that meetings are held to make decisions. These can be held in person, over the phone or virtually. Decisions can also be made through flying or circular minutes. ABA Bioscience Consulting can assist you by managing all of these processes.

When providing your consent of appointment as a director, you will be required to supply a number of things, including:

• Your full name
• Former names (if any)
• Date of birth
• Place of birth
• Current residential address

A constitution is a contract that defines the rules that determine the relationship between and activities of a company, its directors and its shareholders. The constitution usually offers direction on a range of procedural governance matters.

ASIC defines a constitution as being a contract between:

• The company and its members
• The company and its directors
• The company and the company secretary
• A member and each other member

A constitution is required for the following companies:

• ‘No Liability’ public companies
• Special purpose companies

If a company is not governed by a constitution, it will then be subject to the replaceable rules - basic rules defined in the Corporations Act 2001.

ABA Bioscience Consulting will provide you with appropriate advice. Typically, we recommend companies have a constitution rather than rely on the replaceable rules.

The replaceable rules are basic rules for governing a company and are defined in the Corporations Act 2001. The replaceable rules can be used in instances where the company chooses not to adopt a constitution.

In cases where a company’s sole director and shareholder are the same person, the replaceable rules do not apply.

As such, ABA Bioscience Consulting typically recommends the adoption of an appropriate constitution rather than relying on the replaceable rules.

Yes. As outlined in The Corporations Act 2001, share ownership is not restricted to Australians. With this in mind, it is recommended that foreign shareholders understand Australian laws in relation to share ownership and have a thorough understanding of the tax and legal implications in their resident country. Get in touch with our team to learn more about how we can help you satisfy all tax and legal implications.

As stipulated under Section 252 of the Income Tax Assessment Act 1936, a Public Officer is a representative of your company who deals directly with the Australian Taxation Office and other government departments regarding company affairs. This can include things like submitting company income tax returns and keeping records.

To be a Public Officer, an individual must satisfy the following criteria:

• Be 18 years of age or older
• Ordinarily reside within Australia
• Fully understand the nature of his or her appointment

As stipulated in the above criteria, a Public Officer must ordinarily reside in Australia. Therefore, a foreigner is not eligible to be a company’s Public Officer.

To appoint a Public Officer, the company’s board will generally pass a resolution. The nominated Public Officer will then need to sign a form consenting to their appointment. After consent has been formalised, the company must inform the Australian Taxation Office of the appointment in writing.

A Corporate Key is an identifying number that is unique to your ACN. Similar to a PIN number, your Corporate Key should be considered highly confidential as it enables access to your private company information. For this reason, it is important that a Corporate Key is never displayed or disclosed publicly.

This is dependent on the unique circumstances of each company. Working with ABA Bioscience Consulting, we can help you to understand the considerations associated with shares.

A registered office is the official address of a company where all communications from the Australian Taxation Office, ASIC and other governing bodies will be sent. For this reason, all companies must have a registered office.

Unlike a principal place of business, a registered office may be separate from the place where your business operates, for instance, the office of a company representative or ABA Bioscience Consulting.

The principal place of business is the location where your business trades or operates. It is usually the location where communications from customers and suppliers are sent.

A principal place of business can be the same as your registered office, but this is not a requirement.