Government
The Commonwealth of Australia is a federation of six states (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania), two internal territories (Northern Territory and Australian Capital Territory) and a number of minor external territories.

A written Constitution shares power between the central government (Federal Government), located in Canberra in the Australian Capital Territory and eight state and territory governments (State Governments). The Constitution vests legislative power in the Federal Government over various areas relevant to foreign investment including corporations, taxation, trade and commerce internationally and among the states and territories, communications, banking, insurance, insolvency, intellectual property, immigration and industrial disputes. Each state and territory has legislative power to make all laws other than those which are reserved to the Federal Government. Federal law prevails over other laws if there is any inconsistency.

Any foreign investment proposal must comply with the laws of the Federal Government and the State Government where the investment is located and also, in some cases, with the laws of local governments which derive their authority from the relevant State Government.

Legal System
There are two sources of law in Australia: statute law, enacted by the Federal and State Governments, and common law, the decisions of the various Federal and State courts.

Each state has its own court system, consisting of a Supreme Court and a range of minor courts. The Federal Government has its own court system consisting of the Federal Court and the High Court of Australia. The High Court of Australia hears appeals from the Federal Court and (with special leave) the State Supreme Courts. In addition, there are numerous tribunals administering technical areas of law (for example environmental planning and workers compensation) from which a right of appeal exists to these courts.

Introduction
Business is conducted through:

• Companies incorporated in Australia;
• Local branches of foreign companies incorporated overseas;
• Partnerships and limited partnerships;
• Joint ventures;
• Trusts;
• Sole proprietorship; and,
• Other forms of representation.

A national legislative scheme provides identical legislation in each state and territory regulating the formation and continuing obligations of companies (including foreign companies) in Australia (Corporations Act 2001). The Corporations Act 2001 ("Corporations Act") is administered by the Australian Securities and Investments Commission (ASIC), which is accountable to the Federal Government.

Companies have the benefit of separate legal status from, and limited liability for, their shareholders. There are various types of companies but by far the most common is a company limited by shares, being either a proprietary company (called a private company in many other countries) or a public company. A company limited by shares must include the word "Limited" or "Ltd" and its Australian Company Number (ACN) in its name. A proprietary company additionally must include the word "Proprietary" or "Pty" in its name.

A public company is any company other than a proprietary company. It must have a minimum of 1 shareholder.

Most companies are proprietary companies. A proprietary company may have a minimum of one shareholder and a maximum of 50 non-employee shareholders. A proprietary company is further classified under the Corporations Act as being either "small" or "large".

A proprietary company will be large for the purposes of the Corporations Act if it (together with its controlled entities) satisfies any two of the following:

• consolidated gross operating revenue of at least A$10 million;
• consolidated gross assets of at least A$5 million; and
• 50 or more full time employees (part-time employees are counted on a pro-rata basis).

Large proprietary companies have more onerous reporting obligations than small proprietary companies in most circumstances.

Local Branches of Foreign Companies
A foreign company that carries on business in Australia through a branch must register as a foreign company under the Corporations Act in one state or territory.

The requirements for registration include:

• Lodgement of a certified copy of the company's current certificate of incorporation or registration in its place of origin;
• A certified copy of the company's constitution;
• A list of the company's current directors containing personal details (including name, address, date and place of birth);
• Details of any existing charges over the foreign company's property in Australia; and
• Appointment of a local agent (either a natural person or company) for service of notices, etc; and maintenance of a registered office in Australia.

The foreign company is allotted an Australian Registered Body Number (ARBN) when registered.

Usually registered foreign companies must lodge with ASIC a copy of their annual accounts together with any other documents which they are required to prepare under the laws of their place of incorporation.

As with Australian companies, for the purposes of tax legislation, a public officer of a registered foreign company must be appointed. The public officer is responsible for doing everything the foreign company is required to do for tax purposes. This person is liable to the same penalties as may be imposed on the company for any default, but is not personally liable for payment of the company's taxes.

General Partnerships
A general partnership consists of 2 or more partners (to a maximum of 20 except in the case of certain professional partnerships) carrying on business with a view to sharing their profits. Partners may be individuals or companies, resident in Australia or not. A general partnership is not a separate legal entity from the partners themselves. Partners are jointly and severally liable for all liabilities of the general partnership. Each state and territory has its own general partnership legislation, which, together with the terms of any general partnership agreement and the common law, governs the relationship of the partners. General partnerships are not required to file any information concerning the general partnership on any public register (except the names of partners under applicable business names legislation) and therefore confidentiality of trading results of the general partnership (but not of any corporation that is a partner) can be preserved. A general partnership need not be audited, but partners are bound to render true accounts and full information of all things affecting the partnership to any other partner or his legal representative.

The taxation implications of a general partnership are:

• A general partnership is not taxed as a separate entity;
• A general partnership is obliged to file an annual tax return allocating the taxable income or loss among the partners in their respective shares;
• Each partner in its own tax return, for the same tax year, must include its own share of taxable income or loss of the general partnership; and
• The partners must adopt a uniform approach to the tax treatment of income and expenditure of the general partnership business.

Limited Partnerships
Legislation in Queensland, Western Australia, Tasmania, New South Wales and Victoria provides for limited partnerships, which enable partners who do not take an active part in the management of the business to limit their liability. The obligations of general partners are similar to those in an ordinary partnership and their liability remains unlimited. Limited partnerships are generally taxed as companies.

Joint Ventures
In Australian commercial circles, the term "joint venture" is a label for a variety of forms of legal association between investors. There is no statutory or legal definition of what constitutes a joint venture.

Three relatively common variations exist in Australia:

• An incorporated joint venture where a separate legal entity (company) is incorporated to pursue the interests of the joint venturers who are shareholders in the company. The taxation implications of this form of joint venture (assuming it to be resident in Australia for tax purposes) are the same as for an Australian company.
• A unit trust where the beneficial interest in the trust property is divided into units which may be independently dealt with, and usually having a corporate trustee; and
• An unincorporated joint venture where the investors have a contractual association of investors (which lacks both corporate form and equity capital, and which may or may not be a partnership for taxation purposes or partnership legislation). If it is not a partnership for taxation purposes, no partnership tax return is required and each joint venturer must lodge a separate tax return and may adopt a differing tax treatment for the income and expenses referable to its share of the joint venture business.

Joint ventures are a common form of business association, especially in the energy and resources industries.

Trusts
A trust is a legal relationship that arises at common law whenever a person (trustee) holds property for the benefit of one or more other persons (beneficiaries) or for some object permitted by law (such as a charitable object). The trustee has a fiduciary relationship with the beneficiaries who may enforce those fiduciary obligations.

There are two relatively common forms of trust, a unit trust and a discretionary trust.

A business may be carried on by means of a trust where a trustee, which is often a company, holds assets of the business as trustee and carries on trading activities in that capacity.

The most common business trust is a unit trust under which the beneficial interests in the trust are divided into units.

Units may be transferred similarly to shares in a company and may be public or private, listed on a stock exchange or unlisted.

Usually trust income is only taxed in the hands of beneficiaries according to their respective interests in the trust and the trustee does not pay the tax. However, the trustee may be liable for tax in certain circumstances (eg. where there are non-resident beneficiaries). It should be noted that the way in which trusts are taxed might change in the future. Although the Federal Government has recently withdrawn its Exposure Draft which proposed taxing certain trusts in a similar way to companies (ie as a separate entity), the Government now proposes further consultation before deciding whether to alter the current taxation regime for trusts.

Sole Proprietorship
A foreign investor who is a natural person may carry on business in Australia as a sole proprietor under his or her own name or a business name and be personally liable for all liabilities of the business. If the proprietor uses a trading name in the business other than his or her own name it must be registered under the business names legislation of each state or territory in which the business is carried on.

Other Representation
A foreign person or company can, by appointment of a sales representative, distributor, licensee or franchisee, market products in Australia without establishing a formal business presence. This may or may not give rise to a taxable presence, depending on the nature of the appointment.

Company Formation
An investor may either incorporate a new company or purchase a recently incorporated shelf company that has not traded.

For incorporation, a company must be registered with ASIC.

ASIC will issue a certificate of incorporation and the company is given an ACN (Australian Company Number) and may conduct business throughout Australia.

In its application for registration, a company must disclose to ASIC as a matter of public record information concerning the ownership and control of Australian companies, including:

• Registered office and principal place of business;
• Directors and company secretary; and
• Shareholders

Proprietary companies must have a minimum of one director, who must be resident in Australia. Public companies require at least 3 directors, 2 of whom must be residents. A public company also requires at least one secretary but may have more. If a public company has more than one secretary, at least one of them must ordinarily reside in Australia. A proprietary company is not required to have a secretary at all but may do so. If a proprietary company has one or more secretaries, at least one of them must be ordinarily resident in Australia. All must be natural persons. Typically, the day-to-day management of a trading company is in the hands of a General Manager, a Managing Director or a Chief Executive Officer.

Companies carrying on business in Australia must maintain a registered office in Australia.

For the purpose of the Income Tax Assessment Act 1936 (Tax Act), a public officer must be appointed and notified to the Commissioner of Taxation.

Agreements and documents that are signed by a company may be signed either by two directors (or a sole director if it is a sole director company) or a director and a company secretary of the company without using a common seal. Alternatively, a company with a common seal may sign a document using the common seal but this must be witnessed by either two directors (or the sole director) or a director and a secretary of the company.

Public companies must hold general shareholders' meeting (Annual General Meeting) within 5 months of the close of each financial year. There is no such requirement in the Corporations Act for proprietary companies. The financial year of most Australian taxpayers ends on 30 June. Accordingly, most Annual General Meetings must be held prior to 30 November.

The agenda for the Annual General Meeting includes the presentation of the company's accounts together with directors' and auditors' reports (not compulsory for exempt proprietary companies).

The constitutions of larger (particularly public) companies usually provide that a proportion of the directors (often one third) must retire by rotation each year.

Resignation and appointments of directors are usually considered at the Annual General Meeting.

Directors or shareholders may convene other meetings from time to time, in accordance with the company's constitutions and/or the Corporations Act.

A register of certain company information is maintained by ASIC which the public may access. ASIC must be notified (amongst other things) of changes of address or of officers, allotment of shares, passing of certain resolutions and creation of corporate securities.

Public and most large proprietary companies must lodge annual financial, directors and auditors reports with ASIC within 3 months (for disclosing entities or registered schemes) or 4 months (for all other companies of the end of financial year).

The reports include information such as financial statements, any required disclosures, information relating to the company's operations during the year, and any dividends paid or shares issued during the relevant year.

An annual return must be lodged with ASIC by 31 January unless the Company and ASIC agree otherwise. The Annual Return must contain information as to the number of issued shares, names and addresses of shareholders (up to the top 20 shareholders in any one class) and key financial information.

Companies are required to maintain a register of members, option holders and debenture holders. Anyone can inspect the registers of a company. Directors of listed companies are required to disclose their share dealings to the Australian Stock Exchange.

Consistent with the Federal Government's encouragement of foreign investment, the Foreign Corporations (Applications of Laws) Act 1989:

• ensures that those investors who may otherwise have had an element of uncertainty attaching to their investment in Australia, may act with confidence that their legal rights in Australia will not be adversely affected by extraneous considerations, such as the legal status of the territory in which their business is incorporated; and
• provides that where an Australian court has to determine the legal rights of a foreign corporation by reference to foreign law, the law to be applied will be determined by the place of incorporation of the foreign corporation, without regard to the political circumstances, questions of official recognition or otherwise of the government authorities there, or the legal status of the place of incorporation.

Accordingly, foreign corporations can act with confidence that their legal rights in Australia will not be adversely affected by political considerations.

The Federal Government welcomes foreign investment into Australia and recognises the substantial contribution it makes to the development of Australia.

Foreign investment is regulated by the Foreign Acquisitions and Takeovers Act 1975 (FTA) and policy guidelines issued by the Federal Government (Guidelines) which are administered by the Foreign Investment Review Board (FIRB).

The FTA is complex and contains many definitions that not only depart from the ordinary meaning of the terms defined, but also vary in meaning throughout the FTA.

The application of the FTA to a proposal must be carefully considered as the FTA imposes significant penalties for failure to comply with the notification requirements.

Broadly, the FTA and Guidelines require notification to FIRB of proposals by foreign persons involving:

• the acquisition of a substantial interest in an existing Australian business with total assets over AU$50 million or where the proposal values the business at over AU$50 million (AU$800 million for acquisitions by US investors);
• the establishment of new businesses (which is broadly defined) involving a total investment of AU$10 million or more;
• portfolio investments in the media of 5 per cent or more and all non-portfolio investments, irrespective of size, in banking, civil aviation, and telecommunications;
• the takeover of an offshore company (that is, a company incorporated overseas) whose Australian subsidiaries or Australian assets are valued at AU$50 million or more, or account for more than 50 per cent of the target company's total assets;
• any direct investment by foreign governments or their agencies irrespective of size; and
• the acquisition of an interests in urban land (including interests that arise under leases, financing and profit sharing arrangements and the acquisition of interests in urban land corporations and trusts) that involve the:
• acquisition of developed non-residential commercial real estate, which is subject to heritage listing and valued at AU$5 million or more;
• acquisition of developed non-residential commercial real estate, which is not subject to heritage listing and valued at AU$50 million or more;
• acquisitions of accommodation facilities, irrespective of value;
• acquisitions of vacant urban real estate, irrespective of value; and
• acquisitions of residential real estate, irrespective of value.

Generally in the majority of sectors, the FIRB will approve a proposal unless it is judged contrary to Australia's national interest. The Government determines what is 'contrary to the national interest' by having regard to widely held community concerns. In particular, the Government places specific restrictions in especially sensitive sectors such as the media and real estate. In less sensitive sectors including rural business, agriculture, forestry, fishing, resource processing, oil and gas, mining, manufacturing, non-bank financial institutions insurance, share broking, tourism and most other service sectors, the Government registers but normally raises no objections to any notified proposal in which the total investment is less than AU$100 million.

Broadly, a foreign person is a non-resident, or any corporation or trust in which there is a substantial foreign interest regardless of whether the corporation or trust is foreign controlled. A corporation is regarded as a foreign person if 15% or more of the voting power or issued share capital (in the case of a single foreign holding) or 40% or more (in the case of aggregate foreign holding) is held by one or more non-residents. A trust will be regarded as a foreign person if 15% or more of the corpus or income of the trust estate (in the case of a single foreign holding) or 40% or more (in the case of aggregate foreign holding) is beneficially held by a non-resident(s).

Certain notification provisions of the FTA (which relate to acquisitions of shares in Australian companies or an interest in Australian urban land) require FIRB to make a decision within 40 days of the proposal being received in the prescribed form.

Outside of those notification provisions of the FTA there are no formal time limits in which a decision must be made by FIRB. However, the majority of proposals are considered by FIRB and decisions reached by the Federal Government within 30 days of lodgement.

Proposals which are notifiable but are not examinable are usually dealt with more quickly (ie a matter of days).

Substantial civil and criminal penalties are imposed for breach of the FTA and divestment orders may be made.

Even if a proposal is approved under the FTA or the Guidelines, other legislation may need to be complied with including the takeover provisions of the Corporations Act, Trade Practices Act 1974 (TPA) and other legislation applicable to special industry sectors including broadcasting, insurance and banking.

To date Australia has signed investment promotion and protection (IPPA) agreements with Argentina, Chile, Czech Republic, Hong Kong, Hungary, India, Indonesia, Laos, Lithuania, Pakistan, Papua New Guinea, People’s Republic of China, Peru, Philippines, Poland, Romania, and Vietnam. Agreements with Egypt, Sri Lanka, United Arab Emirates and Uruguay have been signed but are not yet in force. Australia recently completed IPPA negotiations with Mexico and Turkey with an intention to sign the agreements in the near future.

Australia is currently negotiating IPPAs with a number of countries including Thailand, Russia and Iran.

Federal, State and Territory Governments offer incentives to attract foreign investment. The Federal Government has established an agency for this purpose, Invest Australia, which offers a free and confidential service for potential investors. Invest Australia has offices in Beijing, Chicago, Frankfurt, Hong Kong, New York, San Francisco, Shanghai, Singapore, Taipei and Tokyo, as well as four offices in Australia. In other major centres, the responsibility for investment promotion lies with the Austrade office in the Australian Embassy or Consulate.

Invest Australia offers a range of services and programs, including:

• giving details of alternative locations, joint venture partners, establishment costs, availability of labour, employee costs, skills and tax;
• connecting potential investors with industry and government contacts and coordinating site visits;
• helping identify investment opportunities, undertaking research in support of proposals and providing advice on strategic direction and analysis of investment opportunities;
• providing information on investment regulations and Government programs;
• advising on Federal, State and Territory and local incentive schemes;
• providing grants of up to AU$100,000 to eligible prospective investors to undertake pre-feasibility and feasibility studies for major investments; and
• facilitating major projects through the Major Projects Facilitation program (which assists potential investors through government approval processes quickly and efficiently) and the Regional Headquarters Programs (which offers immigration and tax incentives for companies considering Australia as their regional location).

The Federal Government will also consider providing additional investment incentives for strategic investment projects in limited and special circumstances. These incentives include grants, tax relief and the provision of infrastructure services.

The Western Australian Government also offers a range of incentives that can be tailored to meet the specific requirements of potential investors. Their services are offered through specialised local agencies or through a network of offices in overseas locations. The incentives include the Business Migrant Incentive Program (BMIP), a Western Australian Government program designed to assist qualifying business migrants intending to operate a business or investment activity in a regional (based at least 50 km from the Perth CBD) area of Western Australia to apply for State sponsorship.

The level of funding is a contribution of up to $1,500 towards the cost of preparation of the written business proposal for State sponsorship. The consultant's fee for preparation of the business proposal is negotiated between the business migrant and the consultant.

Under the Pre-feasibility Study funding provided by the WA Department of Industry and Resources, support of up to AU$20,000 is available to contract the services of independent consultants to undertake pre-feasibility studies to assess the commercial viability and investment potential of projects.

The Corporations Act limits the circumstances in which a person may acquire more than 20% of the voting power in a listed company or a listed managed investment scheme, or an unlisted company with more than 50 members. The term voting power refers to the percentage of voting shares or interests in the company or scheme in which a person or an associate has a relevant interest. A relevant interest is, in broad terms, a power to exercise, or control the exercise of a power to dispose of, or control the exercise of the power to dispose of, shares or interests.

Acquisitions resulting in voting power of more than 20% are permitted in specific circumstances including an acquisition:

• under a takeover bid;
• approved by a resolution of the members of the company or scheme;
• resulting from another acquisition of relevant interests in voting shares in a body corporate included (as a primary listing) in the official list of an Australian stock exchange or a foreign stock exchange approved in writing by ASIC (a "downstream acquisition");
• resulting from participation in a dividend reinvestment plan or bonus share plan; or
• that does not result in a person's voting power being more than 3% higher than it was six months earlier if the person, or any other person, has had power in the company or scheme of at least 19% throughout that six-month period (the "creep rule").

General

Each level of government (Federal, State and local government) imposes its own taxes. The Federal Government is the major taxing authority and levies income tax (including tax on capital gains) under the Income Tax Assessment Acts, fringe benefits tax under the Fringe Benefits Assessment Tax Act, customs and excise duties under customs legislation and goods and services tax (GST). Unlike the wholesale sales tax, the GST is a multi-stage tax and applies to most supplies of goods, services and other things. Although a Federal tax, the State Governments ultimately receive the funds generated by the GST. For historical reasons, the Federal Government also levies special taxes on wine and luxury cars. These taxes are discussed below.

No income or capital gains taxes are imposed by State Governments.

Each State Government raises revenues by imposing stamp and other duties, land tax, pay-roll tax and oil and mineral royalties.

Each local government levies annual charges (rates) on the owners of real estate in its jurisdiction.

There are no gift, death or succession taxes.

Australian taxation legislation is complex and changes to Federal and State Government taxation laws occur at frequent intervals to effect new government policies.

Specific advice should be sought for each proposal.

Double Taxation Agreements are in force between Australia and Argentina, Austria, Belgium, Canada, China (excluding Hong Kong and Macau), Czech Republic, Denmark, Fiji, Finland, France, Germany, Greece (in respect of income derived from international air transport only), Hungary, India, Indonesia, Ireland, Italy, Japan, Kiribati, Korea (South), Malaysia, Malta, Mexico, Netherlands, New Zealand, Norway, Papua New Guinea, Philippines, Poland, Romania, Russia, Singapore, Slovak Republic, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, United Kingdom, United States of America and Vietnam. Agreements with Chile and Turkey may also be finalised in the future.

In general, the supplier of goods or services or other things is required to remit to the ATO GST equal to 10% of the value of the goods, services or things supplied. An input tax credit will generally be available to a business that purchases goods or services relating to the GST on a supply where both the recipient and supplier of the goods or services are registered for the GST and a tax invoice has been received. GST is also payable upon the importation of goods into Australia (usually by the importer).

A business is required to register for GST if it has an annual turnover of AU$50,000 or more. A branch of a foreign company is entitled to be registered for GST purposes. Businesses are required to be registered for GST purposes. Businesses are required to account to the ATO for GST by lodging a Business Activity Statement monthly or quarterly (depending on the turnover of the business).

The liability for paying the GST is generally imposed on the supplier. Therefore, the supplier should determine its prices to take account of GST or there should be a GST clause in all contractual arrangements, which allows the supplier of a taxable supply to pass on its GST liability to the recipient.

As discussed above, the GST is a single rate of tax applied at all stages of supply. Under the sales tax system, wine and luxury cars were subject to higher rates of tax. The Government has kept a higher rate of tax on these goods introducing legislation for separate taxes rather than inserting different rates of tax into the GST system.

The structure and operation of the WET and LCT systems follow the sales tax system rather than the GST system. They apply to goods supplied in, or imported into, Australia.

WET is imposed only on the last wholesale sale (or on an equivalent point as determined in the legislation). A system of quotation defers the payment of the tax to this point. An important difference between the GST and the WET is that GST does not apply where the supply is made for no consideration such as a gift, or the wine is applied to own use whereas the WET, as with sales tax, does tax transactions where goods are given away or applied to own use.

LCT generally applies on the retail sale and importation of luxury cars. Again, a system of quotation defers the payment of tax to this point. This tax is in addition to the GST but is calculated on the price of the car exclusive of the GST.

An entity that buys a luxury car to carry on an enterprise will not be entitled to an input tax credit for the LCT payable.

There are a number of other laws that regulate entities carrying on business in Australia. These generally apply irrespective of whether a foreign company carries on business in Australia through a subsidiary company or directly as a registered foreign company.

The general law of contract in Australia is based on the English common law, although some special types of contracts, such as insurance, employment and sale of goods contracts, are also regulated by statute. At the heart of general contract law is the notion of freedom of contract, except where unconscionable conduct is present.

The formation of a contract under Australian law requires the unequivocal acceptance of a clear offer, the presence of consideration, and an intention to create legal relations.

The Trade Practices Act 1974 ("TPA") prohibits restrictive trade practices such as price fixing, boycotts, monopoly practices, exclusive dealing, resale price maintenance and other arrangements or contracts restricting dealings or affecting competition.

The TPA also prohibits mergers or acquisitions that are likely to substantially lessen competition in Australian markets. This includes takeovers and the acquisition of assets, and mergers effected outside Australia that have an effect on competition in Australia.

Contravention of the TPA can lead to substantial fines of up to AU$10 million, injunctions and other Court orders including orders for divestiture. The Australian Competition & Consumer Commission ("ACCC") is the body responsible for administering the TPA and is a vigorous and well-resourced enforcement body.

Comprehensive consumer protection legislation exists at both the Federal (ie. the TPA) and State and Territory (Fair Trading Acts and Sale of Goods legislation) levels. The TPA and State and Territory legislation protects consumers by:

• regulating certain marketing activities; and
• deeming certain warranties to be included in sales of goods or services to consumers.

Prohibited conduct includes misleading or deceptive conduct, false representations, bait advertising, unconscionable conduct, pyramid selling, referral selling and contravention of product safety standards.

There are no exchange control restrictions on movement of funds into or out of Australia. Certain transactions, however, must be reported under the Financial Transactions Reports Act 1988 ("FTR Act"), which is designed to facilitate the administration and enforcement of taxation and other laws of the Commonwealth.

The FTR Act requires, amongst other things:

• financial institutions and other cash dealers to formally report significant cash transactions (greater than A$10,000) to a Federal Government body;
• financial institutions and other cash dealers to formally report international funds transfer instructions to a Federal Government body; and
• compulsory verification procedures for persons opening or operating accounts with financial institutions.

The reporting obligations relating to transfers of foreign currency to and from Australia are imposed on transactions in excess of A$10,000. Some transactions between financial institutions and another person qualify for exemption from the reporting requirements, subject to the keeping of an exemption register.

The Act provides for substantial fines and terms of imprisonment for failure to comply.

Employment of all workers in Australia is governed by a complex inter-relationship of Federal and State legislation and the common law. In some areas, especially workers compensation and superannuation, regulation can extend to the relationship between principals and independent contractors.

The various pieces of legislation relevant to Western Australia make provision for:

• a process to determine minimum wages and a safety net of terms and conditions of employment (the award process);
• the regulation of employer and employee associations;
• equal remuneration for work of equal value;
• minimum leave entitlements, for such areas as annual leave, parental leave, sick leave and carer's leave;
• minimum termination entitlements;
• regulation of workers' compensation and occupation health and safety;
• minimum entitlements to superannuation contributions;
• prohibitions against unlawful discrimination;
• prohibitions against unlawful termination of employment;
• a framework for collective bargaining and the arbitrated resolution of industrial disputes; and
• minimum notification and consultation entitlements in circumstances of redundancy or workforce restructure.

Unlawful discrimination in employment includes discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, industrial activity, national extraction and social origin.

In recent years, there has been a shift away from the arbitrated, centralised system of industrial regulations towards a system that permits collective or individual negotiation at the enterprise level. This practical operation of the award system provides an underpinning safety net for employees.

In May 1996, the Federal Government introduced the Workplace Relations Bill into Parliament. This was subsequently enacted with most provisions being operative from 31 December 1996. The new legislation amended the existing Industrial Relations Act 1988, retitling it as the Workplace Relations Act 1996 (WRA) and continued the process of devolving the negotiation of terms and conditions of employment to the enterprise level. The WRA attempts to increase flexibility in the system. For instance, it permits direct negotiation between individual employees and their employers to replace award terms with "Australian Workplace Agreements".

There are various available forms of collective agreements (union and non-union) available under the WRA. These agreements, available in various forms and applicable at a workplace level, are known as "Certified Agreements".

The WRA has had a significant impact upon the role of formal industrial awards. Under the WRA, the role of awards is to establish a safety net of minimum core terms and conditions of employment, and there are prescribed limits to the topics that may be dealt with by federal awards. However, the award system remains of considerable importance. For example, subject to special circumstances, Australian Workplace Agreements and Certified Agreements cannot disadvantage employees when the terms of those agreements are compared to the terms available under applicable or equivalent awards.

Subject to the conditions of an applicable federal award, Certified Agreement or Australian Workplace Agreement, (if any), employers and employees in Western Australia will be regulated by the Western Australian workplace relations system. State industrial legislation in Western Australia is distinct from that applicable in other States, and has recently undergone comprehensive changes.

The Industrial Relations Act 1979 (WA) ("IRA") is the primary State Act dealing with industrial and employment issues. The IRA creates and provides the jurisdiction for the Western Australian Industrial Relations Commission (WAIRC) and other derivative statutory tribunals. It also regulates the operations of employee and employer organisations, prescribes statutory offences, and regulates against activities discouraging freedom of association.

The IRA provides for the making, registration and variation of state awards by the WAIRC. State awards provide for minimum wages and conditions and bind all employers and employees in particular industries or occupations covered by the award. Unlike federal awards, state awards may cover any matter that can be defined as an "industrial matter", as that term is defined in the IRA.

The IRA also provides for the making of collective agreements between unions and employers, applicable at a workplace level. These agreements are known as "Industrial Agreements".

Underpinning the terms of employment of all employees in Western Australia is the Minimum Conditions of Employment Act 1993 (WA) (MCEA). The MCEA sets down minimum entitlements for such matters as rates of pay, leave, significant employment change and redundancy, keeping of records and public holidays. These entitlements are implied into the contracts of employment of all Western Australian employees.

Until recently, the Workplace Agreements Act 1993 (WA) (WAA) provided an alternative means of regulating employment relationships. Under the WAA, individual employers could negotiate collective or individual agreements directly with their employees, known as WA Workplace Agreements. Where a Workplace Agreement was in force, an otherwise applicable state award could have no effect. Although the terms of a workplace agreement could not reduce entitlements prescribed under the MCEA, they were generally not required to prescribe terms equivalent to or better than applicable or equivalent awards.

In June 2002, the Western Australian Gallop Labor government passed legislation (Gallop Legislation) prescribing extensive changes to Western Australian industrial and employment legislation. A key part of the Gallop Legislation is the repeal of the WAA, and the phasing out of WA Workplace Agreements.

Individual work arrangements are now known as "Employee Employer Agreements" ("EEAs"), and are dealt with under the terms of the IRA. An EEA cannot disadvantage employees in comparison with applicable or equivalent awards.

Other key changes under the Gallop Legislation are:

• A legislative preference for collective over individual bargaining, and an emphasis on "good faith" bargaining.
• An increased role for the WAIRC in dispute resolution, and in prescribing conditions of employment.
• Increased rights for union officials to enter workplaces and/or inspect documents.
• Enhanced minimum conditions of employment provisions.
• Changes to the State unfair dismissal law, which will be of benefit to employees.

The above is a general description of the structure of industrial and employment legislation applicable in Western Australia. Legislative arrangements are complex and comprehensive, and are augmented by extensive common law principles. Not all important issues are listed. However, three important considerations for potential employers are:

The existence of extensive rights for employees in relation to unlawful and unfair dismissal, via both Western Australian and federal legislation. As to unfair dismissal, a relevant tribunal can deem the termination of an employee's employment unfair irrespective of whether that termination was legal. Remedies including reinstatement, back pay and compensation are available to relevant tribunals upon a finding of unfair dismissal;

Legislative provisions prescribing the transferral of negotiated, arbitrated or accrued rights upon the sale of a business. This issue is particularly relevant for employees covered by federal awards or agreements. These provisions, known as "transmission of business" provisions, mean that at least in the short term, an employer taking over a business may be forced to employ transferring employees under the terms agreed with or applicable to the previous employer. However, the effects of the transmission of business provisions can be reduced by the adoption of an appropriate strategy.

Legislative rights in relation to Freedom of Association. Both Western Australian and federal legislation contains legislative protections for employees who suffer some detriment on account of their choosing to belong, or not belong to a union or employee organisation. Similar protections are directly available to the unions and/or employee organisations. The relevant legislative provisions are broad, and care must be taken where dealing with unions, or where an employee's membership or non-membership of a union is a relevant consideration in the actions or strategies of an employer. Statutory penalties apply for a breach of these provisions.

The Privacy Act 1988 ("Privacy Act") extends privacy regulation to the private sector. The Act requires private sector organisations to comply with ten National Privacy Principles ("NPPs") or with an approved privacy code. NPP's regulate the handling of personal information, including the collection, use and disclosure, and data quality and data security of that information, as well as the right of individuals to access and correct that information. As an alternative to the NPPs, organisations may seek approval for their own privacy code. The Privacy Commissioner, however, will only approve a privacy code if it is no less stringent that the NPPs.

The Privacy Act contains special rules for sensitive information, which includes information about a person's racial or ethnic origin, religious beliefs or affiliations, sexual preferences or practices, or health. Small businesses with an annual turnover of less than A$3 million are exempt from the Privacy Act, unless they choose to opt in, but may in limited respects be made subject to the Act in the future. Some States also have their own privacy regulation.

Intellectual property rights in Australia are protected by Federal legislation and the common law. In addition, Australia is a signatory to the World Trade Organisation Agreement on Trade-related Aspects of Intellectual Property Rights ("TRIPS Agreement"), which provides minium standards for the protection of intellectual property. Federal intellectual property law incorporates Australia's obligations under this and other intellectual property treaties.

Copyright
Under the Copyright Act 1968 ("Copyright Act"), copyright automatically arises in all original literary, dramatic, musical and artistic works, sound recordings and films published by an Australian or first published in Australia. Literary, dramatic, musical or artistic works are protected under the Copyright Act for the life of the author plus 50 years (increased to 70 years under the Australia US Free Trade Agreement) or, if published after the death of the author, 50 years after the first publication. Literary works include computer programs. In some cases, computer programs may also be patented.

Australia is a signatory to the Berne Convention for the Protection of Literary and Artistic Works, which details the minimum rights that must be extended to the authors of other member countries.

Trade Marks
The Trade Marks Act 1995 (Cth) ("Trade Marks Act") creates a registration based system entitling any person to register a mark or sign used in connection with goods or services. The owner of a registered trade mark has the exclusive right to use, and authorise others to use, the mark for renewable periods of 10 years.

The common law tort of passing off and Section 52 of the TPA, which prohibits misleading and deceptive conduct, can be used to protect unregistered trade marks.

Australia is one of the 52 members of the Madrid Protocol, which establishes an international system for registration of trade marks.

Patents
The Patents Act 1990 ("Patents Act") creates a registration-based system which entitles an inventor, or a person entitled to be assigned the invention to apply to protect a device, substance, method or process which is new and inventive. Under the Patents Act, the holder of a patent has the exclusive right to exploit the patent for a period of twenty years. Alternatively, an applicant can seek an innovation patent. The registration process is less stringent, but the protection only lasts for six years.

Australia is one of 124 contracting states of the Patent Cooperation Treaty, which establishes an international system for patent protection in contracting states.

Registered Designs
The Designs Act 1906 ("Designs Act") establishes a registration-based system which enables the owner of a design, which has an industrial or commercial use, to make application for the exclusive right to apply the design. Registration protects the visual appearance, rather than the function of the design, for a maximum period of 16 years.

Confidential Information
This doctrine of law recognises an obligation to keep information secret in circumstances where a person communicates information to another on the express or implied understanding that the information is to be kept confidential. This doctrine provides a remedy in law to the confider against the confidant in circumstances where an unauthorised disclosure by the confidant causes the confider detriment.

Domain Names
Domain names ending in “.com.au” are the most relevant to business in Australia. These domain names are licensed by a number of accredited Australian registrars on a "first come, first serve" basis, although applicants are required to fulfil a range of prerequisites in order to qualify for allocation. An applicant for a “.com.au” domain name must:

• be an "Australian entity" (which includes businesses registered in Australia, and also an owner of, or an applicant for, an Australian Registered Trade Mark)
• seek the domain name for an appropriate commercial purpose; and
• have a bona fide intention to use it.

There must also be a "substantial and close connection" between the domain name and domain name applicant. In comparison with many other country code domains, the “.com.au” is highly regulated in order to ward off "cybersquatters" and protect the rights of trade mark owners. A dispute resolution procedure has been implemented for conflicts over “.com.au” domains.

Australia, like most other nations, has its own system of customs laws, rules and procedures to ensure that it has control over the nation's border and its trade. The Acts that provide for the administrative structure and procedure relating to importations include:

• Customs Act;
• Customs Administration Act;
• Customs Securities (Penalties) Act;
• Customs Undertakings (Penalties) Act;
• Customs Tariffs Act;
• Commerce (Trade Descriptions) Act;
• Commerce (Imports) Regulations; and
• other related regulations.

Introduction - The Customs Act
Although all the above acts relate directly to importers, it is the Customs Act and its regulations that lay down the rules of what importers can and cannot do. It is important to be aware of this Act as many people begin importing goods without being aware of the requirements of both the Customs Act and Regulations.

In general terms the Customs Act details the requirements for:

• the entry of goods into Australia;
• the importation procedures to be followed regarding cargo, shipping and aircraft;
• the landing and examination of goods;
• the warehousing of goods;
• payment of duty;
• the sampling of goods;
• the valuation of goods;
• rebates, remissions, refunds and deposits for securities;
• the power of Customs Officers;
• prosecutions and penalties;
• tariff concession orders;
• anti-dumping duties; and
• other miscellaneous matters relating to the importation of goods.

Importers need to be aware of some or all of the above prior to actual importation. Lack of knowledge in this area may result in delays to the clearance of cargo, particularly if the required documentation is not provided.

Labelling and Packaging
The Commerce (Trade Descriptions) Act details all the information and requirements for the correct marking of a trade description on imported and exported goods. Customs Officers may examine and inspect goods to check that they comply with the requirements of this Act. Imports that do not comply become prohibited imports and will not be released until the problem is rectified.

Australia has strict labelling requirements on most commodities. The labelling requirements vary depending on the type of commodity but usually include the country of origin, the manufacturer/importer details and obligatory warning statements. If the goods are not labelled properly, it may be possible to correct the problem in Australia however, some goods may have to be destroyed or re-exported if this is not possible.

Most problems can be overcome if importers and suppliers are aware of what trade description is required. It should then be a simple task of placing this information in orders to overseas suppliers so that the correct markings are placed on the goods or packages overseas.

The Commerce (Imports) Regulations require all goods to contain a correct trade description and detail what is and what is not acceptable. It is important to note that the Australian Customs Service has been very active in the policing of commerce marking of goods. Increased penalties have been introduced and numerous goods have been seized.

If the importer is aware of the requirements of these Regulations, the correct marking, packaging etc can be completed prior to the arrival of the goods in Australia. This saves time and money and allows the quick clearance of goods.

Up to date information on the Australian Customs Service's current requirements regarding packaging and labelling can be obtained from www.customs.gov.au

Anti-Dumping
The Customs Tariff (Anti-Dumping) Act provides industry with relief from injury caused by dumped or subsidised goods. Dumping occurs when the export selling price is less than the price paid within the domestic market of the exporting country. Subsidisation occurs when exported goods have been produced or sold with the benefit of a subsidy, reduction of freight or any other financial assistance from the government of the exporting body.

Dumping legislation imposes dumping duty based on products using the difference between the normal value and a notional export price of goods. Dumping duty applies irrespective of the actual export price of the goods.

Prohibited Imports
The Customs (Prohibited Imports) Regulations list goods that are:

• prohibited absolutely;
• prohibited unless certain permission is given by approved ministers or authorities or specified conditions and restrictions are met;
• prohibited unless certain conditions relating to the packing for sale or levels of metal release are met; and
• prohibited from certain countries unless the approved authority gives certain permission.

All importers should be aware of these prohibitions, especially those relating to the particular goods that they are importing or wish to import. It is important to note that the Australian Customs Service carries out testing on goods that must meet specified requirements and all testing is charged to the importer. In recent times these charges have increased dramatically. In instances where acceptable overseas certificates are available and acceptable by Customs, which allow exemption from testing, it is advisable to obtain these certificates at the time of importation and present them to ensure that unnecessary testing is not required.

Tariffs
The Customs Tariffs Act relates to customs duties and details amongst other things:

• the rules for classifying goods;
• rates of duty on imported goods;
• concessions for the importation of certain goods or by certain persons, departments, or authorities; and
• countries and places in relation to which special duty rates apply.

There are many concessionary and reduced rates of duty available. The most important will be the concessions applying to goods imported from particular countries, and special concessions for certain types of equipment and goods. For a detailed description on the exemptions available visit www.customs.gov.au

Notifications
In most circumstances an import notice will have to be given to a customs or quarantine officer. This notice must detail (amongst other things):

• the names and addresses of the importer, owner and supplier of the goods;
• a description of the goods including, the country of origin, the packaging and identifying marks;
• the arrival details of the import; and
• other relevant details.

The notification will not have to be given in the case where the goods are the accompanying baggage of someone who travels to Australia or if the goods are sent by mail and have a value of less than A$1000.

Australia is an island continent and as such is free of a great number of diseases and pests that are prevalent in other countries.

Our quarantine rules and regulations are designed to ensure that Australia stays this way and to prevent the introduction of these diseases and pests into Australia. Quarantine and Customs authorities work closely together as their jurisdiction often overlaps.

Each year more than 4 million passengers and 20 million tonnes of cargo pass through quarantine on arrival at Australian airports and seaports.

All of these arrivals pose a risk for human health, our agricultural industries and the natural environment.

The Australian Quarantine and Inspection Service (AQIS) is a service within the Department of Agriculture Fisheries and Forestry.

AQIS is responsible for the administration of the Quarantine Act 1908 (Cth) and its related legislation.

Its task is to safeguard Australian primary industries and improve the prospects for marketing of their products by providing:

• quarantine programs that facilitate the importation of animal products, plants and plant products. The programs aim to promote agricultural production by improving Australian plant and animal genetic stock while maintaining the maximum practical protection against entry and spread of exotic pests and diseases; and
• inspection services that ensure that export products are safe, wholesome, accurately described and in compliance with the requirements of importing countries so that health and quality standards of products from Australia can be maintained.

Quarantine aims to protect Australia and Australians against the entry of unwanted exotic pests and diseases. If quarantine inspections were not carried out, the numerous cargoes of animals, plants and foodstuffs that are important to our trade with overseas countries could bring in hidden pests and diseases.

The quarantine regulations and requirements vary according to the types of goods being imported, the country of origin of the goods, the type of packaging of the goods etc. However, all wooden dunnage and packaging used in containers must be treated in some way.

All second hand plant and equipment, agricultural machinery and cars and motorbikes will also be subjected to inspection and further treatment if required.

Most wooden articles from Asia must be fumigated while wooden articles from all other countries are subject to inspection for pests and may require treatment.

Certificates from the country of origin may be available detailing the procedures the goods have undergone, and these should be presented to a customs or quarantine officer on entry of the goods. If the required certificates are available, they are correctly filled out and comply with the Quarantine requirements, then further treatment and inspection may not be required.

Charges and time delays are associated with all Quarantine services so it is important to check all details and requirements before importation so that you can budget for these extra costs.

For specific conditions placed on the import of more than 13,000 different commodities, you can search the ICON database maintained by AQIS at www.aqis.gov.au/icon

Food
Importers of foodstuffs should be aware of the Imported Food Program jointly run by AQIS and Food Standards Australia New Zealand (FSANZ). This program provides a national, uniform requirement for point of entry monitoring of imported foods to check their compliance with the Australia New Zealand Food Standards Code. Importers of certain foods may need to obtain a permit to import quarantine material.

This is particularly so in the case of foods which may contain tropical fruits or vegetables, milk, egg, meat or other animal product as an ingredient.

However, all imported foods are liable to testing. The frequency of inspection and the checks to be performed depend on the assessed health risks associated with the food, past reports of non-compliance with Australian requirements or the past unsatisfactory record of the overseas producers of the food.

The frequency of inspections is determined by the risk category to which the food is assigned. At the highest level, every shipment from new overseas suppliers in the high-risk category, or from overseas suppliers with a poor record of compliance, will be tested. After five consecutive satisfactory results at this level, the frequency of inspection will be reduced to one in four shipments from the suppliers, but with an immediate return to full batch testing in the event of a failure.

In the surveillance category, shipments are randomly selected for inspection at a rate of approximately 10 per cent of the food by country-of-origin, for full compliance with the Code.  These checks are necessary to ensure that all imported food products satisfy the Code. To pass inspection, foods that are presented for importation to Australia must satisfy strict criteria based on;

• the absence of microbial contaminates;
• accurate labelling (including whether or not the food contains genetically modified ingredients of more than 0.1% concentration;
• product composition requirements;
• the appropriate use of additives;
• residues (chemicals and/or heavy metals) at levels below those set by the National Foods Authority; and
• the absence of foreign matter.

The advantage in checking imported foods at the point of entry, as opposed to point of sale, is that action can be taken straight away rather than responding to complaints after the damage has been done. This means that all non-complying foods are detected, rather than just isolated cases that leave other non-complying foods undetected in the marketplace. For further information go to www.aqis.giv.au/icon

The Customs (Prohibited Exports) Regulations along with other product specific legislation govern the exportation of goods from Australia. As the regulations governing exportation are numerous and somewhat complex, the information provided is more a brief summary of the issues involved. It is recommended that all first time exporters seek assistance from an experienced customs broker to ensure that all the required permits and documentation are available.

The Government imposes conditions or prohibitions on the export of certain goods for a variety of reasons including:

• industry protection;
• quality control;
• international agreements;
• trade embargoes;
• defence considerations;
• protection of wildlife; and
• protection of cultural artefacts.

Some examples of prohibited exports include: protected wildlife; some cultural heritage artefacts; selected weapons and other dangerous goods.

Exports are controlled essentially so that Government can:

• implement certain policies which entail prohibiting the export of various goods either absolutely or conditionally;
• levy duties on particular exports; and
• adequately record Australia's international trade.

Export permits or similar export authorisations issued by Government Departments or agencies responsible for particular goods, are to be lodged with the shipping or airline company for production to Customs as required by legislation.

These permits are required where goods are subject to export conditions and the exporter must apply to the appropriate department or agency for approval to export.

An export declaration must be lodged for all goods intended for export unless they are exempt. Goods exempt from export entry requirements are as follows:

• Goods that are accompanied or unaccompanied personal or household effects of a passenger or a member of the crew of a ship or aircraft
• Goods, included in an air or sea consignment that has an FOB value not exceeding $2,000:
• Goods belonging to the Australian Defence Forces
• Goods belonging to Foreign Defence Forces
• Transhipment Cargo
• Goods temporally imported under s162 A
• Part shipped consolidation (air cargo only)
• Bags of mail
• Australian domestic or coastal cargo
• Australian Ships and aircraft spares

If the required exportation documents are not lodged with the ACS, goods will not be loaded on departing ships and aircraft.

Exporters must lodge export declarations with Customs using the Integrated Cargo System (ICS), or documentary (manual) lodgment methods.

Reporting electronic export declarations to the ICS can be achieved two ways, including:

• electronic data interchange (EDI) software package
• Customs Interactive (CI) which is an Internet based facility accessible through the Customs website.

Exporters who choose to electronically report their export declarations to Customs through the ICS are required to purchase a digital certificate to secure their electronic messages to Customs. Once a digital certificate is purchased, exporters must register in the ICS, identify themselves as exporters and obtain a unique client identifier number.

Paper export declarations may be lodged, but only in person at a Customs counter or a designated Australia Post outlet. Evidence of identity is required each and every time a paper export declaration is lodged.

Exporters should also be aware of their obligations under Section 240 of the Customs Act that requires owners of goods entered for export to retain commercial documents for a period of five years. A Customs Officer may examine these documents and failure to retain the required documents could lead to prosecution and a fine of up to $2,000.

It should be noted that controls placed over the exportation of goods are subject to change and any information required on specific matters or commodities should be sought from the Export Section of the Australian Customs Service at http://www.customs.gov.au

This overview is intended to provide foreign investors, importers and exporters and their advisers with a summary of the general principles involved in Australia's foreign investment policy, laws relating to importing and exporting, and other matters relevant to the establishment and conduct of business in Western Australia.

As laws affecting these activities change periodically and can be complex in their application to specific foreign investment proposals and transactions, this overview should not be relied upon or used in substitution for specific advice concerning the application of Australian laws to particular proposals or transactions.

This overview was last updated in November 2004.