Proprietary Limited Company (Pty Ltd)
Proprietary Limited Company (Pty Ltd)
Company formation in Australia
The Pty Ltd is best suited for: Foreign founders entering the Australian or Asia-Pacific market, Startups seeking venture capital in Australia, SMEs wanting a well-regulated, English-speaking jurisdiction, Companies eligible for the R&D Tax Incentive (43.5% refundable offset). Companies with aggregated turnover below AUD 50 million are classified as base rate entities and taxed at 25%. All other companies are taxed at 30%. Australia operates a dividend imputation (franking) system: when a company pays tax on its profits and distributes dividends, the tax already paid is attached as franking credits. Australian-resident shareholders can use these credits to offset their personal tax liability, effectively eliminating double taxation of corporate profits. There is no general capital gains tax exemption, though a 50% CGT discount applies to assets held for more than 12 months by individuals and trusts. Foreign-sourced income of Australian-resident companies is generally taxable, subject to foreign income tax offset provisions.
- Foreign founders entering the Australian or Asia-Pacific market
- Startups seeking venture capital in Australia
- SMEs wanting a well-regulated, English-speaking jurisdiction
- Companies eligible for the R&D Tax Incentive (43.5% refundable offset)
Key Facts
Step-by-Step Formation Process
Reserve a company name (optional)
You may reserve a company name through ASIC for AUD 55, valid for two months. Alternatively, you can register directly with an available name at incorporation. The name must include "Pty Ltd" and cannot be identical or too similar to an existing registered name.
Prepare incorporation documents
Gather signed consents from all directors and shareholders, prepare the company constitution (or adopt the replaceable rules under the Corporations Act 2001), and collect KYC documents — passport copies, proof of address, and a registered office address in Australia.
Lodge application with ASIC
Submit Form 201 (Application for registration as a company) electronically via ASIC or through a registered agent. The government fee is AUD 559 for standard processing. At least one director must be an Australian resident — an ordinarily resident citizen, permanent resident, or eligible visa holder.
Receive ACN and Certificate of Registration
ASIC issues an Australian Company Number (ACN) and a Certificate of Registration. The ACN is the unique identifier for all future ASIC filings. An Australian Business Number (ABN) is typically applied for simultaneously.
Post-incorporation setup
Register for GST if annual turnover will exceed AUD 75,000 (mandatory), set up PAYG withholding if hiring employees, open a corporate bank account, register for WorkCover (workers compensation) if applicable, and establish accounting records. Annual reviews must be filed with ASIC, and a tax return submitted to the Australian Taxation Office (ATO).
Required Documents
- Passport copies of all directors and shareholders
- Proof of residential address for all officers (utility bill or bank statement, within 3 months)
- Signed consent to act as director (Form 201)
- Registered office address in Australia
- Company constitution or adoption of replaceable rules
- Details of share structure (number, class, and value of shares)
Cost Overview
Tax Treatment
Companies with aggregated turnover below AUD 50 million are classified as base rate entities and taxed at 25%. All other companies are taxed at 30%. Australia operates a dividend imputation (franking) system: when a company pays tax on its profits and distributes dividends, the tax already paid is attached as franking credits. Australian-resident shareholders can use these credits to offset their personal tax liability, effectively eliminating double taxation of corporate profits. There is no general capital gains tax exemption, though a 50% CGT discount applies to assets held for more than 12 months by individuals and trusts. Foreign-sourced income of Australian-resident companies is generally taxable, subject to foreign income tax offset provisions.
Pros & Cons
- Separate legal entity with perpetual succession, providing clear liability protection for shareholders
- Base rate entity tax of 25% for companies with aggregated turnover under AUD 50 million — competitive for a G20 economy
- Franking credit (dividend imputation) system eliminates double taxation of distributed profits for Australian-resident shareholders
- R&D Tax Incentive provides a 43.5% refundable tax offset for eligible companies with turnover under AUD 20 million
- No minimum share capital requirement — practical barrier to entry is low
- Highly regarded jurisdiction with strong rule of law, AAA credit rating, and transparent regulatory environment
- Access to 46 double tax treaties and growing Asia-Pacific trade agreements (RCEP, CPTPP)
- At least one director must be an Australian resident — foreign founders without local ties need a nominee director
- Annual review fee payable to ASIC (currently AUD 310 for small proprietary companies)
- Superannuation guarantee (currently 11.5%) adds significant cost to hiring employees in Australia
- Transfer pricing and thin capitalisation rules apply to cross-border related-party transactions
- Striking off a company requires a formal deregistration process and can take several months
Other Structures in Australia
Ready to form a Pty Ltd in Australia?
Get a personalised cost estimate and next steps.
Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.