Canadian businesses expanding into Australia may set up a subsidiary or a branch. A subsidiary is a separate Australian company, so the Canadian parent is generally not exposed to Australian trading liabilities. A branch keeps everything in the one entity, but the Canadian parent must lodge its financial statements with ASIC, where they become publicly available, unless relief applies.
What is the difference between a branch and a subsidiary in Australia?
A branch is your existing Canadian company operating directly in Australia. Before carrying on business here, it must register as a foreign company with ASIC and is issued an Australian Registered Body Number (ARBN). Branch registration creates no new entity, so the Canadian company remains liable for what the branch does.
A subsidiary is a new Australian company owned by the Canadian parent. It is incorporated with ASIC and receives an Australian Company Number (ACN). Either structure then registers with the Australian Taxation Office (ATO) for an Australian Business Number (ABN), Tax File Number (TFN), GST and Pay As You Go (PAYG) withholding as required.
Should a Canadian business choose a branch or a subsidiary in Australia?
The two structures commit a Canadian parent to different things. A branch keeps one legal entity, so the Canadian company carries the Australian liabilities and is the contracting party. It must appoint a local agent, and unless relief applies it must lodge its financial statements with ASIC, where they become publicly available. Australia taxes only the income attributable to the Australian permanent establishment, and because dividend withholding tax applies to dividends paid by a company, it does not arise on a branch remittance to head office.
A subsidiary is a separate legal person, generally responsible for its own liabilities, and the Canadian parent can hold all the shares. It must have at least one director who ordinarily resides in Australia. As a foreign-controlled company it must lodge financial reports with ASIC unless an exemption applies. If it is an Australian tax resident it is taxed on worldwide income, and dividends paid to Canada attract withholding tax.
Worldwide income means all income a company earns, from every country, not just where it sits. A tax resident is assessed on the whole lot. A non-resident is assessed only on income with a connection to that country.
Example
A Canadian civil construction contractor incorporates an Australian subsidiary in Brisbane to bid for infrastructure work. In its first full year the subsidiary earns:
$4 million from road and bridge contracts for Australian clients
$1 million from a project in Papua New Guinea, managed and staffed out of the Brisbane office
$200,000 in interest on surplus cash held on deposit with a bank in Singapore
The subsidiary is an Australian tax resident because it's incorporated here, so Australia assesses all $5.2 million, not just the $4 million from Australian contracts.
Run the same work through a branch and the Canadian company is a non-resident, so Australia taxes only the profit attributable to the Australian permanent establishment. The two foreign items then behave differently. The Singapore interest is earned on the company's own treasury cash and is unlikely to be attributable to the Australian operation, so it falls outside the Australian net. The Papua New Guinea project was run by the Brisbane office, so under arm's length attribution principles that profit is very likely attributable to the permanent establishment and taxable here anyway.
That is the practical distinction. Residency captures foreign income automatically. A branch captures it only where the Australian operation actually earned it, which for a contractor with people and plant on the ground is more often than people expect.
This example illustrates how the rules work and is not tax advice. The figures and the company are hypothetical, and real outcomes turn on the facts: where the work is performed, who bears the risk, how contracts are written, and what the treaty says.
Your operations can also trigger rules the structure choice does not settle. Dealings with the Canadian parent, such as management fees, software licences or intercompany loans, can raise transfer pricing, withholding tax and thin capitalisation obligations.
Talk to our tax team before settling on a structure and we will model the numbers against your actual operations.
Where do Canadian businesses commonly get caught out?
Delays come from assuming Australia works the way Canada does. The differences sit in each structure.
Establishing a branch: Canada compared with Australia
Requirement | In Canada | In Australia |
Registration | Extra-provincial registration in each province where you carry on business. A company incorporated outside Canada needs a provincial licence | One ASIC registration covers every state and territory |
Local representative | An agent for service in the province | A local agent under the Corporations Act 2001, who can be personally liable for the company’s penalties |
Financial reporting | Filed in the home jurisdiction | Head office financial statements lodged with ASIC and publicly available |
Two hurdles catch Canadian parents. The first is disclosure. A registered foreign company must meet ongoing ASIC obligations, including lodging financial statements anyone can access, and privately held Canadian companies rarely expect head office accounts to be visible. The second is that a branch needs two local officeholders with no Canadian equivalent: a local agent answerable for its Corporations Act obligations, and a resident public officer representing it to the ATO. We provide both, so registration is not held up while you find someone in Australia.
Establishing a subsidiary: Canada compared with Australia
Requirement | In Canada | In Australia |
Incorporation | Federally or in a province, then register extra-provincially wherever you operate | One incorporation with ASIC, valid nationally |
Director residency | 25 per cent resident Canadians federally, or at least one if fewer than four. Ontario, British Columbia and Alberta have no requirement | At least one director must ordinarily reside in Australia, with no exemption for foreign-owned companies |
Director identity | No separate director identifier | Every director needs a director identification number, or director ID, before appointment |
The resident director rule is the usual blocker. Canadian groups incorporating in Ontario or British Columbia are used to boards with no local member, and the Australian role carries real statutory duties, so it cannot be a name on a form. Our resident director service fills it if you do not have a local director. The second hurdle is timing: directors resident in Canada cannot apply online for a director ID and must lodge a paper application with certified identity documents, which adds weeks and stalls bank onboarding. We assist you with the application alongside the company registration so both run together.
How ABN Australia can help
Helping overseas businesses set up and operate in Australia is all we do, and our roots go back to 1976. For Canadian clients that means one team handling the whole Australian side, not a referral chain.
We can model the branch and subsidiary outcomes against your plan, complete the branch establishment or company registration, and fill the roles you cannot fill from Canada as your resident director, local agent or public officer. We handle your ABN, TFN and GST registrations, then stay on for payroll, activity statements and statutory accounts. You deal directly with the people doing the work.
Contact our team for a free consultation. We will tell you which structure fits, what it takes to register, and what it will cost to run.
Frequently asked questions
Ro Elvinia
Marketing Manager