Exporting to Australia

Exporting to Australia

Exporting to Australia

Five key questions and answers for aspiring exporters.

Almost three-quarters of Kiwi companies say they see Australia as a key market for their growth ambitions. PwC Private Business Partner Mike Bignell provides his answers to five questions he’s often asked by ambitious exporters.

It’s our largest trading partner, closest neighbour and the easiest foreign market to get into for Kiwis. Australia: where, according to PwC’s 2017 CEO Survey, 72% of Kiwi companies have set their sights as a key market for growth– joint top with the USA.

If exporting or setting up a business across the ditch is in your plans, you’ll likely have plenty of questions that need answering. In PwC’s Private Business practice, we often get approached for answers around tax and company establishment – important queries that will ultimately play a part in the success of your venture overseas.

To help clear things up, here are four of the most common questions we’re asked by aspiring Kiwi exporters looking to crack Australia, as well as some general answers.

If I’m selling products or services in Australia, do I need to set up an Australian company?

The short answer is no. Just because you trade in Australia, you don’t need to set up an Australian company – which is good news, because there is a regulatory cost of doing so. You’d need to appoint an Australian resident director just for starters.

There’s a range of other regulatory requirements as well, and many other alternatives that can be investigated before you have to establish an Australian company.

Generally, businesses would only need to do this when they’re looking to scale quite quickly in Australia and employ more than a few individuals.

In the year ending June 2017, Kiwi exports to Australia reached a value of $13 billion, second only to China (13.2 billion).

When do I need to register for GST in Australia?

Typically, when you’re either the importer of goods into Australia or you physically perform services in Australia, you’ll likely have a GST activity in Australia and then need to register. However, this is a changing environment. With the increase in digital sales to consumers, the requirements for New Zealand business to account for GST on sales made to Australian consumers is increasing.

To register for GST in Australia, you’re required to obtain an ARBN and ABN number. While the forms are a little long, the only complicating factor for New Zealand businesses is the need to have a local agent, which is different to the need to have a local director as there are fewer responsibilities.

A local agent is needed so the authorities have a physical address in Australia to communicate with you. Most Kiwi businesses know someone in Australia who can be the post box for them.

If I register for GST am I subject to income tax?

The answer is no – the requirements to register for GST are disconnected to the obligations of being an income tax payer.

In order to be subject to income tax in Australia, the New Zealand business needs to have more of a fixed presence in Australia, which typically only happens when they have full-time employees over there.

If I am subject to income tax in Australia, can I offset this against my New Zealand tax?

In short, yes, but this requires a more complex structure in Australia, which often does not align with commercial objectives.

In my experience, people get very concerned about being double taxed on Australian income when they shouldn’t. The issue of double tax is contextual and people should truly understand how real this issue is in dollar terms before they attempt to structure around it. Often the cost of the structuring is more than the benefit received.

What’s a good first step to take?

Remember, the right answers to these questions depend on your business’ unique situation. Having a basic workshop around how you’re going to service your Australian customers is a great way to put in place the most cost-effective structure for the short and medium terms – and start the exciting project of exporting to Australia.

If you’re planning on reaching a new market across the ditch and have other questions, please feel free to get in touch.

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