Although it is not a recognised global financial centre like Hong Kong or Singapore, international investors who incorporate a company in Australia often find a readily available pool of funding support when seeking to raise capital. The following is an overview of funding options available to entrepreneurs who incorporate a company in Australia.

A company is allowed to list on the ASX if it meets one of the following criteria:

i) The listing company has A$2 million in net assets; or a market capitalisation of at least A$10 million (post-IPO); or

ii)Net profit after tax of A$1,000,000 over the last three years plus A$400,000 over the last 12 months (providing the company is still profitable).

The Australian government, through Invest Australia, offers a wide range of alternative funding options for entrepreneurs who incorporate a company in Australia. Examples of government incentives include:

i) R&D tax concession - providing tax concessions to encourage research and development (R&D), Australian companies can deduct up to 125% of qualifying expenditure incurred on R&D activities when lodging their corporate tax return. For example, a company that has incurred annual eligible expenditure on R&D activities exceeding  US$17,500 is eligible for the R&D Tax Concession. In 2006, more than 5,800 companies were registered for the R&D Tax Concession. Applications for concessions are lodged with the government agency AusIndustry;

ii) Export Market Development Grants (EMDG) – available through the Australian Trade Commission, this initiative provides reimbursements of up to 50% on expenses incurred by Australian companies on export promotion. To qualify, the company must a) have an annual income of less than A$50 million b) have incurred at least $20,000 of eligible export expenses under the scheme (first-time applicants can combine two years expenses). The EMDG scheme is ideal for companies promoting inbound tourism to Australia or the export of intellectual property or knowhow outside Australia;

iii) Renewable Energy Development Initiative (REDI) – grants between A$50,000 and A$5 million are available for R&D projects with high potential to cut industrial emissions, for example solar, wind, geothermal, biomass and water-related projects;

iv) Commercializing Emerging technologies (COMET) – this program provides grants of up to A$64,000 to small Australian enterprises with high potential for rapid growth via the production of innovative products, processes and services. In 2007-2008 28 enterprises received COMET approval.

Because of the above, foreign investors who incorporate a company in Australia are attracted to precision and high value added sectors in Australia. In 2006, Australia’s IT sector was ranked the world’s 5th most competitive in terms of i) technological infrastructure ii) the availability of skills and iii) balanced government support.

Australia’s hedge funds industry boasts assets under management of A$63 billion (US$58 billion) in 2006 (A$45 billion in 2005), more than Hong Kong and Singapore combined. In 2006 there were 70 hedge fund managers and 129 hedge fund products in Australia, compared with 92 in Singapore and 139 in Hong Kong.

Australia has a credit rating of AAA from Standard & Poor’s, the highest rating available. Consequently, Australia is a reliable, stable country in which to invest and obtain finance to support investment.

For more detailed information on the corporate finance and incentives available to investors who incorporate a company in Australia, purchase our Asia Business Setup book.

For more information to incorporate a company in Australia, email email@healyconsultants.com or call us in Sydney at +61 280 147 568

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