 Doing Business In... Australia If you are an entrepreneur or small to medium sized business you will find a range of information and expert professional advice you need to do business in Australia. Need professional advice? Potential investors are advised to consult one of our member firms at an early as they will be able to ensure that all relevant matters are identified. Australia Fast Facts GDP US$345.9 million GDP per head US$19,840 GDP growth 3.8% Inflation 2 - 3% Local currency Australian Dollar (100 cents = 1A$) Exchange rate AS$1.94: US$1 (January, 2002) Capital city Canberra Population 19 million Area size 7.68 million sq. kilometres Top 5 import sources USA; Japan; China; UK; Germany Top 5 export markets Japan; USA; Korea; New Zealand; China All figures as of 2000 unless stated.Australian economyAustralia has a 'mixed economy' - a capitalist, free-market economy exists alongside considerable governmental participation in the economic system. Various levels of government still closely regulate substantial sections of the economy, including: the labour market, the waterfront, telecommunications, and the corporate sector. International tradeAustralia's traditional dependence on minerals (including oil and gas) and farm commodities has decreased, although these sectors still account for over 50 per cent of Australia's visible exports. Manufactured goods now account for more than 30 per cent of Australia's visible exports. A number of reforms have been carried out to make Australia's economy more dynamic and internationally competitive. They have included: the floating of the Australian dollar; the deregulation and ongoing reform of the financial system; lower corporate taxation; the introduction of new competition into the telecommunications sector; the deregulation of the air  transport industry; and the introduction of greater flexibility into the labour market. Legal and judicial systemThe Australian legal system is based on English common law, with a local overlay of parliamentary legislation and Australian judge-made law. Each state and territory has its own system of local law administered by state or territory Courts, with a state or territory supreme court at the apex of the structure. There is also a system of federal courts operating Australia-wide handling matters of federal law. The summit of the Australian legal system is occupied by the High Court of Australia.Government Australia is a federation, similar to the United States of America. There are six states, each with its own local legislature and government. There are two federal territories controlled by the National Government but which have important powers of local government. Finally, there is the national legislature and government centred in Canberra. The Australian National Government comprises a Prime Minister and a Cabinet of Ministers, all of whom are members of the National Parliament. The National Parliament is elected every three years.There are two major political parties in Australia: the Liberal Party which is mildly conservative in orientation, and the Labour Party which is only slightly left-of-centre, with a mildly reformist and progressive social agenda.  A range of information you will need to do business in Australia is listed below. If you need professional advice please click here or on the 'Contacts' button.
 ForecastOct 15th 2002 From the Economist Intelligence UnitSource: Country Forecast The domestic political outlook will be dominated by the Liberal/National coalition government s efforts to pursue its economic policy agenda in the face of an opposition-dominated Senate. The government is planning to sell its remaining stake in the telecoms operator, Telstra, but must still win the support of four opposition senators to do so. Real GDP growth is expected to expand by 3.7% this year, underpinned by buoyant domestic demand. A recovery in export growth will help to offset a moderation in domestic demand in 2003 and 2004, when growth is forecast at 3.4% and 3.7% respectively. The stronger Australian dollar should help to contain price pressures in 2003-04, with annual inflation forecast at around 2.5%, the middle of the 2-3% target range set by the Reserve Bank of Australia (RBA). Key changes from last monthPolitical outlook
The composition of the upper house has become more fragmented since senators who were elected at the federal election in November 2001 took their seats in August, and combined with growing rifts within the Australian Democrats, the government may find it easier to secure the four votes needed to pass legislation opposed by Labor, the main opposition party.  Economic policy outlook The recent turmoil in global equity markets has persuaded the RBA to leave the overnight OCR unchanged at 4.75% since June. The strength of domestic demand, still strong growth in consumer credit demand and growing concern about the house price bubble mean that another rise in interest rates is likely before the end of the year, with further rises expected in 2003. However, growing global uncertainties mean that rates are likely to rise more slowly than previously expected. Economic forecast The weakness of external demand has led the Economist Intelligence Unit to cut its real GDP growth forecast for this year from 4% to 3.7% and our forecast for 2003 from 3.7% to 3.4%.  Australia - Overview by city
Principal cities CanberraThe capital of Australia is Canberra, situated in the ACT mid way between Sydney and Melbourne. It is a modern city containing the National Parliamentary buildings, the headquarters of the various heads of government and the High Court, as well as embassy representatives from most foreign countries. The population (313,000) of Canberra is heavily represented by Government employees and there are few corporate head offices.More information:ACT GovernmentSydneyThe largest city in the country is Sydney, capital of the state of New South Wales, situated on picturesque Sydney Harbour. Sydney with a population of almost four million is a large cosmopolitan complete with a spectacular CBD, a number of internationally recognised buildings, great surf beaches and an excellent climate. A majority of corporate head offices are located here, the Australian Stock Exchange is headquartered here, as is the Reserve Bank and  majority of international flights come though Sydney.Its population is spread over a very large area and there is an extensive public transport system including rail, bus and ferry. More information:Sydney OnlineMelbourneMelbourne, capital of Victoria is the second largest city with 3.25 million population. It hosts the head offices of a majority of banks, and there is a traditional rivalry with Sydney. The city is elegant with broad boulevards and a combination of modern and restored period buildings. It is regarded as the Cultural Capital of the country as well as the sporting Capital, an unusual mix which sits easily with its multi cultural fabric.The climate is temperate, with hot summers and cold winters. Melbournians have a reputation for attending sporting and cultural events in large numbers.The suburbs cover a vast area and are serviced by an extensive public transport system of trams, trains and buses. Other centresOther state capitals vary in size although all contain significant commercial activity and all business facilities.BrisbaneThe capital of Queensland, a large city with a tropical climate surrounded by beaches to the north and south. Brisbane is a relaxed and social city growing at a rapid pace.More information: Brisbane City web siteAdelaideThe capital of South Australia is an old city squeezed between the hills and sea. Excellent education facilities and the initial centre of the wine industry. More information:South Australian Tourism CommissionPerthThe capital of West Australia and a four hour flight from the east coast. Perth is the commercial centre of this vast state, and many mining company head offices are located in this relaxed city. Summers are extremely hot. More information:Streets of PerthHobartCapital of the island Tasmania, Hobart is the smallest and second oldest capital of the country. DarwinDarwin is Australia's window to Asia, being closer to Singapore and Jakarta than to Sydney. It is a new city reconstructed after Cyclone Tracey.  Let's Make a Deal!
What you should know before negotiating It is appropriate to present a business card at an introduction.Before a meeting proceeds, there is usually some preliminary "small talk." Establishing rapport is important in Australian business culture.Speak plainly and expect what you say to be taken literally. In turn, interpret what Australians say to you in the same direct manner.Often, Australians will be initially trusting of people they consider their equals; this attitude will quickly change, however, if they find a reason to be suspicious.Australians are usually distrustful of authority and of people who think that they are somehow "better" than others. Remain modest at all times; in conversation, refrain from drawing attention to your education, professional experience, business success, and related achievements. Cynicism is an important part of the national character. A great deal of cynicism is directed at people who seem too wealthy or powerful. In this culture, there is greater respect for the "underdog."Australians generally dislike negotiating and aggressive sales techniques. Since they value directness, presentations of any kind should be straightforward, with an emphasis on both the positive and negative outcomes.An overly enthusiastic or earnest presentation that appears to be filled with exaggerated claims will only cause the speaker to become an object of ridicule.Keep your presentation simple and "to-the-point," since digressions or excessive details will not be well-received by an Australian audience.Modesty, casualness, and an air of nonchalance are characteristic attitudes in Australian business culture. Australians tend to be receptive to new ideas. Generally, they are analytical, conceptual thinkers. Established rules or laws usually take precedence over one's feelings. During negotiations, company policy is followed at all times.Empirical evidence and other facts are considered the most valid forms of proof. Feelings of any kind are usually regarded with suspicion, particularly for decision-making purposes.In presentations and conversation, Australians are often receptive to sporting analogies.Ethnocentrism tends to be strong here, so nationalistic pronouncements may enter into an Australian's arguments or presentations.Australian businesspeople may emphasize profit over market share.Refrain from discussing your personal life during business negotiations. Generally, Australians do not like or trust people who appear to give excessive praise. This behaviour sometimes raises the suspicion that they are being set up to be embarrassed or misled in some way. Moreover, Australians dislike being pressured and will only resent the stress that accompanies high expectations.The work environment in Australian business culture tends to be collaborative. Before a decision is made, top management will consult subordinates and their input will be given careful consideration. Consequently, decision-making will be slow and protracted. It will be in your best interests not to try to rush this process.Deadlines and producing results are the main sources of anxiety in this culture.Decisions of any kind must be in accordance with company policy. Australians do not find it difficult to answer "no." Informing against one's "mates" is regarded with disgust in this culture.If you are teased, take it good-naturedly; you may tease back in an affable, rather than mean-spirited, manner.Australian women are still struggling for increased salary and positions of authority. In the workplace, men may not always treat women as equals.Work is sometimes perceived by Australians as a "necessary evil." Prosperous Entertaining Entertaining for business success If you are invited out for a drink, don't bring up the subject of business unless your host does so. In an Australian pub, bear in mind that each person is expected to pay for a round of drinks. Neglecting your turn to pay for a round will only create a bad impression. When hosting a dinner at a restaurant, you might have to bring your own supply of alcohol, since some establishments may not have liquor licenses. When in doubt, make inquiries ahead of time. Moreover, your Australian guests will likely be displeased if alcohol is not served with meals. Beer is usually the preferred beverage.Australians do not pick up the tab automatically when they invite people out to dinner. The exception would be if it's a special occasion and they offer to pay either before the meal or at the conclusion of the meal. Australians assume they will "go Dutch" when making casual arrangements to go out. Australian table manners and settings are similar to those in North America, only more relaxed. For example, eating with your hands is often perfectly acceptable, as well as displaying a remarkable appetite.Most Australian dishes are similar to those from England and North America. Meat pies are especially popular. Kangaroo meat is considered a delicacy in this country, although most Australians have never tried it. Many who have, however, do not like it or are unimpressed by its flavour. You may be invited to a home, even after a relatively brief acquaintance. Australian hospitality tends to be very informal, particularly when you are invited to a home. Often, you will be encouraged to serve yourself, after being told where to find the available food and drink. Hesitation will only cause your hosts to feel annoyance, if only because they genuinely want you to feel "at home."It is customary for guests to bring beer or a bottle of wine for their hosts.Barbecues, affectionately known as " barbies," are a very popular form of home entertaining. Guests will be required to dress casually and engage in lively socializing.Unannounced visits are not part of Australian culture; always make it a point to phone ahead.Tourists and business travelers in Australia may leave tips, if they wish, and this gesture will be accepted with gratitude. This rule applies to servers in restaurants, taxi drivers, hotel staff, and skycaps. Appointment Alert! Making appointments Appointments are relatively easy to schedule at practically all organizational levels. You'll find that many executives will be pleasant, approachable, and willing to meet to discuss business. The best policy is to arrange an appointment one month in advance.Business hours are 9:00 a.m. to 5:00 p.m., Monday through Friday and 9:00 a.m. to noon, Saturday.For the business traveler, the best time to visit is from March through November, since the tourist season occurs from December through February. Avoid scheduling visits around Christmas and Easter, since many executives will be on vacation during these periods.While you should strive to be punctual, understand that Australians sometimes have more of a casual attitude toward time. In some cases, if you are a few minutes late to a meeting, it will be overlooked. In other instances, however, your late arrival may cause you to be perceived as a careless, unreliable businessperson. On the other hand, if you find yourself waiting for your Australian counterparts to arrive, remain patient and accommodating.If you are an employer, it's not enough to insist that your Australian employees arrive on time; you will have to give convincing evidence that their tardiness is harming the organization.Gift Giving -
Selecting and presenting an appropriate business gift - Generally, gift-giving is not part of Australian business culture. But, if you are invited to a home for dinner, it's permissible to bring a token gift of flowers, chocolates, a craft from your home region, or wine.
- An illustrated book from your home region can be another welcome gift.
- A preserved food product unique to your home region can also be a good choice; preserves must canned or bottled, however, or they will be confiscated by Australian customs.
- Bear in mind that your thoughtful choice is considered more important than the actual cost of the gift.
First Name or Title? Respectfully addressing others For initial greetings, last names preceded by "Mr.", "Mrs.", or "Ms." should be used; "Sir" is another term of respect. Australians tend to quickly move on to a first-name basis, but wait for them to initiate this transition.Among even relatively new acquaintances, first names are used both in personal greetings and business correspondence. Again, wait for an Australian to initiate the move to a first-name basis.When using titles, follow the lead of others. In Australia, professional or academic titles do not necessarily command respect. It's up to the individual to win the favour and esteem of others.Professional titles are not prominent in Australian business culture, and are sometimes dismissed as pretentious. Consequently, do not go around "advertising" your title. Announcing your title when meeting an Australian may be perceived as a form of boasting."Mate" is another popular term of reference. It refers to anyone of one's own sex, but when used with the pronoun "my (e.g. "my mates"), it refers to one's friends. Women also refer to other women as "mate."  Public Behaviour
Acceptable public conduct The handshake is the preferred greeting. Men should refrain from being too physically demonstrative with other women.It is the custom to shake hands at the beginning and end of a meeting. It is acceptable for visitors to introduce themselves in social situations."G'day, mate" is a popular casual greeting, particularly between individuals who have already established a cordial acquaintance.When speaking to an Australian, keep an arm's length distance from the person. Maintaining personal space is important in this culture.Don't break eye contact with an Australian when he or she is talking to you.Touching, patting or hugging other men in public is considered socially unacceptable.It is common for men to open doors for women, as well as employees for bosses and youth for elders. It is common for strangers to greet one another and strike up animated conversations.Point with your entire hand; pointing at someone with your index finger may only cause offense. Men should refrain from winking at women.Blowing your nose in public is considered socially unacceptable.Your best approach is to remain friendly, relaxed, modest, and unpretentious. Moreover, try to control any behaviour such as nervousness, officiousness, or self-importance. Australians are very difficult to impress; even if you do manage to impress them, they may not openly admit it.Although it is customary in this culture for men to sit in the front with the taxi driver, this is not the case for women. A woman traveling alone should sit in the back left passenger seat of the car; the driver will be on the right. Business Dress Guidelines for business dress Australia is in the Southern Hemisphere, so the seasons are opposite to those of North America. Most of the country is tropical, but with Australia's vast size, this varies greatly. Southern Australia has warm summers and mild winters, so light clothing is recommended. During winter months, warmer clothes and rain gear will be necessary.Business dress is conservative. Men may wear a dark suit and tie; during the summer, the jacket can be removed. Suits, skirts and blouses, or dresses are standard for women. Business dress, however, may be more informal in very tropical climates.  Conversation
Welcome topics of conversation General Guidelines Don't break eye contact with an Australian when he or she is talking to you.Australians tend to be enthusiastic conversationalists and debaters. A wide range of topics may be open to discussion, including religion and politics. The best policy, however, is to wait for your Australian companions to bring up these two subjects; be prepared to hear very strong and often confrontational opinions.Australians find arguments and opinionated conversation entertaining, so don't hesitate to express your views if they are sincere and informed. Your Australian companions will be quick to let you know if you have introduced a subject that "crosses the line." Ethnic relations, particularly in Australia, should not be mentioned.Australians tend to be receptive to sporting analogies.Australians like to criticize themselves, but they are not receptive to criticism from others. This can put you in a difficult position, especially if the conversation shifts to animated denunciations of Australia and Australians. Should you show any signs of agreement, abuse will likely be heaped upon you and/or your home country.Don't boast about yourself or your company's accomplishments. Instead, Australians will judge your competence and abilities through your actions.Australians try not to draw too much attention to their academic qualifications, at least in public. People who make a lot of references to their education and other professional qualifications in conversation will only be subject to teasing. Sometimes, Australian businesspeople feel defeated by these attitudes and begin regretting their accomplishments. Some go so far as to move to another country, where they won't feel the unrelenting pressure to hide their success. Australia - Accounting and audit requirementsIntroductionThere are various types of business that operate within Australia and these fall into the following approximate categories: -
Sole Traders (individuals carrying on a business, profession or trade) -
Partnerships (groups of persons and/or corporations carrying on business together) -
Incorporated Associations (e.g. charities, sporting associations, etc) -
Trusts (Discretionary or Unit Trusts Public or Private) -
Corporations: Private (Pty Ltd - large or small); Public (Limited - unlisted or listed on the Australian Stock Exchange; No Liability Corporations (either unlisted or listed on the Australian Stock Exchange)  Our intention in this brief introduction to the area will be to address matters pertaining to corporations, since in our experience, this is the area which generates most confusion to the public at large.Statutory accounting and audit requirementsPreparation of accounts ( financial statements ) is governed by the Corporations Act and Australian Accounting and Auditing Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board. These may be either general - or special - purpose financial accounts depending upon whether the entity is deemed to be a reporting or non-reporting entity. This determination is made by the company s directors and is determined with reference to Australian Accounting Standard AASB 1025: Application of The Reporting Entity Concept and Other Amendments . This standard defines a reporting entity as an entity (including an economic entity) in respect of which it is reasonable to expect the existence of users dependent on general purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources . In short, this means that if users of the financial statements are not able to obtain information about the financial operations of a business other than that which is disclosed in the accounts themselves, then the accounts presentation is deemed general purpose and all accounting standards and corporations law requirements must be applied to them. If, on the other hand, the end user is able to obtain clarification of matters disclosed in the accounts direct from the company in the form of supplementary information that is not disclosed in those accounts, then the accounts are deemed special purpose and do not need to comply with all accountings standards, etc.Small versus large proprietary companiesProprietary companies are divided into 'small' and 'large' entities. The distinction between them is categorised as follows:A company is classified as small for a financial year if it satisfies at least two of the following tests:
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Gross operating revenue of less than $10 million for the year -
Gross assets of less than $5 million at the end of the year -
Fewer than 50 employees at the end of the year  A company that does not satisfy at least two of these tests is classified as large.The reporting requirements of such companies are as set out in Section 10 of the Corporations Act.Under this section, a small company is only required to prepare financial statements if requested to do so by the Australian Securities and Investments Commission ( ASIC ) or by shareholders who hold at least 5% of the company s voting shares.Although the Corporations Act itself may not require a small proprietary company to prepare a financial report except in the circumstances mentioned, the company may need to prepare the annual financial reports for the purposes of other laws (for example, income tax laws). Moreover, good business practice may also make it advisable for the company to prepare the financial reports so that it can better monitor and manage its financial position. Large proprietary companies must prepare annual financial reports and a directors' report, have the financial report audited and send both reports to shareholders. They must also lodge the annual financial reports with ASIC unless exempted.Listed versus unlisted public corporationsPublic companies must all lodge their accounts with ASIC. Listed corporations (i.e. those public and no liability corporations whose shares are listed on the Australian Stock Exchange ( ASX )) are also governed by the listing rules of the ASX which require that additional information be provided to the exchange over and above that which needs to be lodged with ASIC. Listed corporations are required to prepare financial statements on a half-yearly (to 31 December) and yearly (to 30 June) basis. ASIC accepts the lodgement of the half-yearly report with ASX as the fulfilment of a company s obligations to lodge the half-yearly accounts with ASIC. The annual accounts for the year ended 30 June however must be lodged at both ASX and ASIC in order to comply with the ASX Listing Rules and the provisions of the Corporations Act.The due dates for lodgement are set down in the Listing Rules and Corporations Act which also sets down the time limits within which the company s annual general meeting must be held and the accounts should be sent to shareholders, etc.
 The Corporations ActIt should be noted that the Corporations Act is a state Act and certain requirements and provisions may vary on a state by state basis within Australia. There is a move generally, however, to align all of the State Acts so that all regulations and/or requirements are consistent across states. This has not yet been achieved. The only real step in this direction to date is the requirement of national lodgement of various ASIC forms, etc. The current requirement in this regard is that the majority of forms are being lodged and addressed/monitored in Victoria, although there are facilities to lodge forms in all states and territories.Accounting and auditing standardsThe accounting and auditing standards that are observed within Australia were established by the Australian Accounting Standards Board and are constantly being monitored and updated to suit the changing needs of the accounting community within Australia. When this occurs, given that the world as a whole is becoming more globalised from a business point of view, consideration is given to the requirements of international standards and all current revisions are being made with the aim of obtaining a standard that would be valid throughout the international business world and that would take into account global accounting practices rather than just local Australian ones.These notes are intended only as a general introduction to what is in fact a very complex area. Any MSI member firm will be happy to discuss the particular requirements that you may have.
 Australia - Foreign exchange control
The Financial Transaction Reports Act (1988) requires that any cash transaction of over $5,000 involving the flow of funds to or from Australia must be reported by cash dealers to AUSTRAC (The Australian Transaction Reports Analysis Centre). Any cash transaction of $10,000 or more within Australia must also be reported. There are exemptions available for certain transactions and businesses.There is no barrier to funds transfers in or out of Australia and there is a floating currency.
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