29 January 2014

Introduction to Australian Gas Market

Linda Miles, Trade Development Manager, UKTI PerthColleen Handy, Tax Manager, UHY Haines Norton

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Australia – A Comparison in Geography

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Why should you do business in Australia?

Strong and stable economy

AAA credit rating

Good current and future growth prospects

Anglo-Australian bonds

Common language and customs

High regard in Australia for UK products as “High Quality – Low Cost”

Similar business, legal and regulatory framework

Strong Australian Dollar making UK goods and services more affordable

Strong IP protection

Strong presence of British businesses in Australia already

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Why should you do business in Australia?

Gateway to Asia

Easy access to a region with the greatest potential growth in the world

Educated, multilingual, and skilled workforce

Quality of life

Five Australasian cities listed in the world’s Top Ten most liveable cities (The Economist)

Strong, stable economy

22 years without a recession

GDP per capita in world’s top ten

Average growth rate of 2.5%

Similar to UK

More British people in Australia than any other foreign country

Similar business culture, tax, legal regulations

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OPERATOR

UKBHP Billiton*BP*Shell*

EuropeGDF Suez* (France)Maersk Oil* (Denmark)Total* (France)

AustraliaArrow EnergyOriginSantosWoodside

AmericaApache#Chevron*ConocoPhillips*ExxonMobil*Hess*

AsiaInpex* (Japan)PetroChina* (China)Sinopec* (China)

*Companies with a UK office#Company with presence in UK North Sea

Established market in Australia

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Northern Territory ProjectsBonaparte LNGCaldita BarossaCash MapleEvans ShoalHeron Ichthys

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Queensland Projects

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Queensland Projects

CSG to LNG Unconventional

Gas

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Western Australia Projects Browse Crown Crux Equus Gorgon Laverda Macedon Olympus Pluto Poseidon Prelude Scarborough Wheatstone Zola

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Victoria

Bass Strait

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Project Opportunit iesState Company Project Status

NT ConocoPhillips Caldita Barossa Feasibility

NT Eni Heron Feasibility

NT GDF Suez Bonaparte LNG Pre-feed

NT Inpex Ichthys Construction

NT PTTEP Cash Maple Feasibility

NT Shell Evans Shoal Feasibility

NT Woodside Sunrise Feasibility

NT ConocoPhillips Darwin LNG Operation

State Company Project Status

VIC ExxonMobil Bass Strait Operation

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State Company Project StatusWA Apache Olympus FeasibilityWA Apache Zola FeasibilityWA BHP Billiton Macedon OperationWA Chevron Gorgon ConstructionWA Chevron Wheatstone ConstructionWA ConocoPhillips Poseidon FeasibilityWA ExxonMobil Scarborough FeasibilityWA Hess Equus FeedWA Santos Crown FeasibilityWA Shell Crux FeasibilityWA Shell Prelude ConstructionWA Woodside Browse FeasibilityWA Woodside Laverda FeasibilityWA Woodside Pluto Operation

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Process of Tender Approval

Up to $50mn

$50mn to $300mn

$300mn to $1bn

More than $1bn

PR

E/

FE

ED

EP

C/

M

Even if you are supplying into a Tier 5 provider, it is

probable that you will require “Approved Supplier Status”

from Tiers 4, 3, and 2, as well as the Operator. This is

unless you are only supplying component parts.

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*While an existing relationship or past experience with a company may assist in proving your track record etc, do not expect it to enable side-stepping or skipping parts of the above process.

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Detailed engineering and procurement

Colleen HandyJanuary 2014

Establishing your business in

Australia – practical issues

In partnership with:

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Setting up business – Practical issues

• Expanding your business to Australia is a big step!

• Planning your expansion is key !

• Speak to others who have made the move, local representatives,

accountants, lawyers, Business Development Networks etc

• Don’t assume the laws and regulations will be the same as the UK

• Implementing a tax efficient structure is key to ensuring the commercial

success of your expansion to Australia

In partnership with:

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Setting up business – Branch vs Subsidiary

• Tax payable by a PE/branch or a subsidiary is the same

• Currently rate of tax is 30% on net profits

• Business assets owned by a non-resident and part of a PE/Branch operations in

Australia remain within scope of Capital Gains Tax (CGT)

• In contrast, the disposal of shares in a subsidiary company by a non-resident will

be outside the scope of CGT, unless that subsidiary’s value is more than 50%

attributable to real property

• Advantages of subsidiary company: limited liability, lower level of disclosure

compared to a branch, generally quicker to set up

In partnership with:

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Setting up business – Subsidiary

• It can take 1-2 days to register a subsidiary in Australia

• Registering involves lodging an application with ASIC (equivalent of the UK’s

Companies House)

• Once registered the company is provided with an ACN (Australian Company

Number) which must be shown on letterheads and other business documents

• The company is also required to register with the Australian Taxation Office

(ATO) for its ABN (Australian Business Number), GST (similar to VAT), PAYG

(similar to PAYE)

In partnership with:

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Registering as a foreign Company

• A foreign company or similar entity is able to carry on a business on its own

account (branch or subsidiary) provided it has registered in Australia.

Appointing and authorising at least one local agent or director to act on its behalf

Maintaining a registered office in Australia

Lodging specific company documents and financial statements with ASIC

Identifying the business as a foreign company in written contracts and

correspondence

In partnership with:

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Setting up business – Branch

• It can take a long time to register a branch in Australia

• Registering involves lodging an application with ASIC (equivalent of the UK’s

Companies House) and original or certified copies of various documents are

required

• The branch is also required to register with the Australian Taxation Office (ATO)

for its ABN (Australian Business Number), GST (similar to VAT), PAYG (similar

to PAYE)

In partnership with:

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Setting up business – ATO requirements

• Subsidiaries and branches prepare accounts and file tax returns reporting

income and deductions to 30 June each year

• With ATO approval a different accounting period ending on another date

may be adopted

• Deductions are similar to those permitted in the UK and include R&D

incentives

• Transfer pricing policies may be needed – even for SMEs

In partnership with:

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Setting up business – Employer requirements

• As an employer you must:

Meet minimum wage regulations, EBAs, Union requirements, visa requirements

Pay superannuation on Ordinary Times Earnings

Pay a State Payroll Tax (the rate differs depending on the State the employees

are based in)

Have adequate workers compensation insurance (compulsory)

Research the working hours, holiday pay, long leave and other employment law

requirements

Comply with Health and Safety Requirements

In partnership with:

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Setting up business – Tax rates

• Rates of tax in Australia for residents to 30 June 2014:

In partnership with:

Threshold Tax rate %

$0- $18,200 0

$18,201 - $37,000 19

$37,001 - $80,000 32.5

$80,001 - $180,000 37

$180,001 + 45

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Setting up business – Superannuation

• Superannuation is a specially designed long term investment for retirement

savings

• Employers are obliged to pay a minimum superannuation amount for each

employee into a recognised superannuation fund

• Currently this is 9.25%, set to rise to 12% by 30 June 2020, of ordinary

times earnings

In partnership with:

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What can UKTI Australia do for you?

Introduction services:

Orchestration of meetings with prospective business partners, distributors, suppliers, and Australian Government bodies

Local knowledge:

Tailored, experienced, and impartial advice about how to maximise your chances of success in Australia

Market reports:

Provision of up-to-date information about the industry and market, relevant to your business case

Market testing:

Opportunities to reduce the cost, risk, and time of establishing your business in Australia, by working in one of our business centres

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What can UKTI Australia do for you?Online enlightenment:

Provision of industry-specific web-seminars (“webinars”), accessible from your own homes and businesses in the UK

Product launch:

Access to one of our boardrooms, for use in marketing your business (available in most Australian state capitals)

Promotion:

PR services through local media, UKTI e-newsletters, e-marketing, and social media campaigns

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What’s next?

Feel free to ask questions after this presentation

Follow the conversation on LinkedIn

Follow the UKTI twitter account: @uktiaustralia

Keep yourself updated on the latest Australian business opportunities

Attend UKTI’s industry-specific webinars

Visit our website: gov.uk/world/australia

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Questions?

Linda MilesTrade Development Manager

Email: linda.miles@fco.gov.uk

Chris Egan

Trade Development Officer

Email: chris.egan@fco.gov.uk

Colleen Handy

Tax Manager, UHY Haines Norton

Email: chandy@uhyhn.com.au

Information and images courtesy of: Arkay Career Services, Western Australian Department of State Development, Queensland Government, Invest Queensland, The Economist Intelligence Unit’s Liveability Ranking and Overview, 2013 Francis Norman, Xodus

Group, PESA News, PESA News Resources Online, The Sydney Morning Herald, UK Trade & Investment, Vividus