This article is written, not as a detailed guide for the business visa to Australia, but as a supplementary paper to explain to those interested in applying for the business visa, how business works in Australia, what is the Department of Home Affairs looking for in your Business Visa submission, and how do they gain trust, confidence that your submission is true and honest.
It is also written to show that applying for a business visa is not an easy process, and accordingly with Oz Visa Central, we stand out as the leading migration agent for processing business visas. Within the team of Oz Visa Central, we have partnered with qualified accounting firms provide the best advice not only for the submission of a visa, but also in investing in Australia.
If you are looking for details about Visa eligibility, then please click here, because this article is not about eligibility but about the Australian business environment, regulations, reporting, and investment decision making.
If you are searching for an understanding as to what the Department of Home Affairs is looking for in a submission, then please read on.
My name is Chris Wong, and I am a qualified accountant with over 25 years of experience in Australia. My accounting experience includes auditing, corporate reporting, financial and management reporting, tax, accounting controls review and strengthening, board submissions and reporting, integration of mergers and acquisitions and regulatory reporting.
My dear friends at Oz Visa Central have asked me to write a paper describing the business framework of Australia, and how this drives the visa submission, review and outcome of the Department of Home Affairs. In addition, I will outline how business operates in a regulatory framework in Australia and how this translates to what is preferably submitted with a business via application.
I apologise in advance, that the language used can be quite technical and confusing, but also written an informal aspect. If I were to explain every technical aspect of business in Australia, I would need to write a book which is not the purpose of the article. I have written it informally, as I understand business owners from around the world operate at various levels sophistication or simplicity, and hence I want to ensure that readers can understand the essence.
Australian Business Regulatory Framework
Australia is a developed country with a mature and highly regulated business environment. Often businesses are crying out that there is too much regulation and compliance, that hinders the profitability of the company, whilst on the flip side that has been debate that customers and investors require more compliance and disclosure. With this in mind, you can obtain a general feel that Australian business are relatively transparent, owners, investors, lenders, borrowers, the financial institution and structure is strong. It means, that to run a business, it simply isn’t using scraps of paper, a mobile phone and discretely using cash to create a sustainable business. No. Far from it. It requires capital, it requires planning, adherence to rules and regulations. And in doing so, this creates a fair and level playing field (a fair go for all, as the Aussie slang goes) for businesses.
So let’s begin with registration of an Australian Company.
ASIC – Registered Company
In Australia all “businesses” need to be registered with the Australian government and this is through various departments. These different departments are governing bodies by the Australian Government to regulate the business industry. One of the government bodies ASIC, which is the government body which overseas and regulates the registration, processing of Australian business. ASIC provides both an Australian Business Number (ABN) / Australian Company Number (ACN) for businesses, and it is through these numbers that ASIC can monitor each business.
Business registered with ASIC, depending on their size, must submit various reports, notifications, instructions. Some of these submissions include details of shareholders (owners), changes in shareholder holdings, audited financial statements, notification of any changes in business activity that ASIC should be aware of.
When you submit for a business visa with the Department of Home Affairs, the department is therefore looking for formal correspondence of your business with the relevant business regulator from which your company operates from. They are wanting to see submissions which supports the creation of your company, who the owners are, their percentage of ownership, names, addresses, correspondence with the regulator, and regular submissions of the financial position of the company.
It is therefore extremely important that you can provide this information to the Department of Home Affairs as it helps them validate the legitimacy of your business. If your country, does not have a regulatory body which overseas businesses then this is a set back. And the onus of proof that your business is legitimate becomes difficult.
Audited Financial Statements
Australian businesses registered with ASIC must provide audited financial statements (or Statutory Reporting). Financial Statements are produced using the Australian Accounting Standards which use double entry bookkeeping. Financial Statements, for many large companies in Australia, are often produced monthly and provide the background for Senior Management to manage the business. A Financial Accounting System is often used, to assist with the preparation of monthly financial statements.
Audited Financial Statements are provided to ASIC annually. An “audited” set of Financial Statements, means that an Accounting firm that is qualified to perform an Audit has reviewed the full year Financial Statements, and has checked that it is an accurate reflection of the balance sheet and profit and loss together with supporting Financial Statement notes. In addition, there are other required disclosures that are needed. This whole package of financial statements, disclosures, notes is often referred to as Statutory Reporting.
When you submit for a business visa with Department of Home Affairs, the department is therefore looking for your equivalent of statutory reporting in your country.
They want to see the financial statements; they prefer that it is using Generally Accepted Accounting Principles and therefore a balance sheet, profit and loss and equity statement is produced. And most important, that a qualified accounting firm has reviewed the financial statements and has formally declared that it is accurate. If the accounting firm is from the Big 4 (PWC, EY, Deloitte, KPMG), then this adds a lot of credibility.
Board Meetings and Board Reporting
The “Board” in Australia businesses, is often defined as the Directors of the company. The Directors represent the owner of the company (as opposed to those who execute the operational activity of the company). The Directors as a group form a Board. These lines between Board and Senior Management (like CEO, CFO, COO,) can often be one and the same, as their roles combine between strategic Director views and the operational activities. You will therefore find that members of the Board can be various people with different roles, but ultimately they represent the owners, shareholders and are there to represent their interests.
During board meetings, there often are formal reports submitted by Senior Management and is reviewed by the Board. Board reporting, as it is known, is required to be kept and maintained by the Company Secretary, and some of these reports are also formally signed and provide to ASIC as evidence that the company is being fully compliant with Australian law.
When a submitting for a business visa with the Department of Home Affairs, the Department is looking for evidence of board management. They will want to see formal documents that have been lodged with your country’s regulatory in order to have evidence that the company is operating truly as it declares it to be. This evidence will provide comfort to the Australian government, that your company is not a sham, that it truly exists, and is operating in accordance with the laws in your country.
Often businesses in countries around the world do not have “Board” or “Board meetings”. It is therefore imperative to show, how are the owners interests maintained. How does the owner keep informed of the performance and strategic direction of the company, and how does the owner steer the company towards the direction that they want. The Department of Home Affairs, would normally want to see regular meetings, documented meeting notes and a whole raft of business related topics and discussion material.
In Australia, every company, partnership and individual are required to submit a tax return to the Australian Tax Office (ATO). In order to submit a tax return, you must have a Tax File Number (TFN). A TFN can be issued to companies, partnership and individuals, and for companies the TFN is linked to your ABN/ACN.
Companies are therefore required to lodge annual tax returns, in addition they are required to submit Pay As You Go statements (PAYG) each quarter, which is a way of the ATO saying, pay me your taxes each quarter in an approximate amount, but at the end of the year we will true it up or down for any adjustments with your annual tax return.
Lastly, in Australia we have a Goods and Services Tax (GST). The GST is commonly known as a Value Added Tax (VAT) and is also referred to an Indirect Tax. A GST return is required to be submitted to the ATO if the company is registered as a GST provider. How GST is calculated and reported, I won’t go into detail, but be aware that this is needed in Australia for most companies.
So, in respect of your business that you are running in your own country, the Department of Home Affairs will want to see that formal tax returns lodged with your country’s Tax Department. The more supporting documents that you have formally lodged (or your company rather) the better. And for all forms of required taxation forms.
If your company does not submit a tax return, then this will be a significant roadblock in the submission for a business visa. If your company does not submit tax returns, then it may be questioned how does your company submit taxes, and how does anyone (let alone the tax regulator) trust that the profit and loss of your company is what you say it is.
Together with board meetings and reporting, there are also operational reports that assist the direction and running of the business. These may include but not limited to: Management Accounting, cash flow projections, strategic papers, capital requirements, profit and loss by product or distribution channel. These reports often are not submitted to any government body, but are necessary in the running of a company.
The Department of Home Affairs is looking for any evidence that your company is operating in the manner that it states it is. And is therefore looking for any internal reporting that assists senior management and owners.
If you cannot produce this, then this would generate great doubt as to the legitimacy of your business. How can your business run without any documented notes?
The Australian Business regulatory framework is a very sophisticated structure, which is not easy to understand if you are not involved with Australian businesses. There is a lot of governance, reporting, compliance, rules to abide by.
In knowing this, the Department of Home Affairs is also searching for ways to validate that your company, your assets that you will include in your business visa submission is honest, true and accurate. Formal evidence, proof, history, sustainability, longevity, legitimacy are all aspects at the forefront of their minds.
Therefore, when exploring an Australian Business Visa, you will need the expertise of a Migration Essentials to steer you in the right direction. Compiling a business visa, requires significant time in accumulating the required documentation as proof of a strong business. You must not also forget, that this is only one aspect of an Australian Business Visa, you must then also consider what to invest in, who to partner as a business in Australia.
The road is not easy for a business visa, but that is why Oz Visa Central there to provide you with the greatest chance of success.