Mundo’s Country Rating is an index whereby our team of specialists analyzed a combination of elements regarding different kinds of freedom, giving special attention to personal, financial, and business freedom. Today, we want to talk about our ratings for one of our countries: Australia. The rating for each category goes from 1 to 10.

Political Stability: 10

Australia is a country belonging to the British Commonwealth of Nations. It is composed of a Constitutional Monarchy with a parliamentary system of government, with Queen Elizabeth II of England as Head of State, and a Prime Minister as head of government, who comes from the legislative bench that holds a majority in Parliament.

Scott Morrison is the current Prime Minister of Australia. He took office in 2018 when the Liberal Party of which he is a member, managed to have a sufficient amount of votes for his promotion. At a general level, Morrison's mandate currently has a high level of approval and respect from the citizenship and other Australian political forces. Different polls and surveys presume that for the 2022 elections, the Liberal Party will repeat as the majority in Parliament.

Although Australia has experienced several changes of government during the last decade, the country has maintained an important level of political stability, which translates into high levels of investor confidence in the economy of the sixth largest country in the world.

Externally, Australia has consolidated its relations with the United States, while tensions with China, its main export destination, remain at a certain level of tension due to different impasses suffered during the last 2 years.

In general, although political power is disputed between the Labor Party and the Liberal Party, there are no major threats from either of them, as they distance themselves from radical positions and policies that tend to threaten the confidence of investors and foreign capital holders.

Personal Safety: 10

Australia is generally considered to be a fairly safe country for locals and foreigners alike. It is no coincidence that this is the destination of millions of migrants from all over the world. Levels of xenophobia or attacks on foreigners are minimal, and anyone who decides to visit or relocate permanently to Australia should take no more precautions than they would normally take in any major city in the world. 

In terms of road safety, Australia has established strict safety measures in the different highways and tourist destinations. Speed limits, vehicle controls, and camera monitoring systems are present at all times, since road accidents, especially during weekends or holidays, are highly common in the different Australian states and cities.

The U.S. State Department has rated Melbourne and other cities as a "low threat" to government officials and the general public. It is recommended not to travel in solitary places at night, to be aware of personal belongings at all times, and in general, to be alert at all times. In Australia, the emergency number is 000. Calls to this number are free of charge.

Taxation: 8

Taxes in Australia are collected by the Australian Tax Office. It also has tax treaties with over 40 countries, mainly aimed to avoid double taxation of foreign entities operating on the island. Businesses can save money by paying the correct amount on time and taking advantage of any tax concessions that they are entitled to. They can choose to make tax payments monthly, quarterly, or annually. The main taxes are the Income Tax, Capital Gain Tax, and Goods and Services Tax.

-Company Tax: All companies in Australia are subject to a federal tax rate of 30% on their taxable income. But, regardless of whether there are no tax breaks for companies, the government has made exceptions for “small businesses,” which are subject to a reduced 26% for the 2020/2021 fiscal year, reducing to 25% for 2021/2022. 

According to tax rules, a Small Business is one that, together with certain 'connected' entities, falls below the aggregated turnover threshold of AUD 50 million.

-Capital Gains Tax: Capital Gains Tax (CGT) applies to any capital gain made through assets’ disposal. It is paid as part of income tax, so its rate is also 30%.

Foreign entities may be subject to CGT on assets acquired and used in carrying on a business in Australia. Businesses are required to keep records upon acquiring assets that may be subject to CGT in the future. Small businesses may also be eligible for CGT concessions under certain circumstances.

-Goods and Services Tax: Goods and services tax (GST) is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. The Australian Goods and Services Tax (‘GST’) was introduced in July 2000. It is similar to the European Union’s VAT system, requiring re-calculation and payments to the tax authorities at each transaction point in the onward sales chain.

Businesses in Australia are required to collect a sales tax of 10% on behalf of the government, which they must submit to the applicable Australia revenue department in a periodical BAS (Business Activity Statement) lodgment. Unlike the United States' sales tax, which is only charged on sales to end consumers, the GST is collected on all sales - even of raw materials but also with numerous exceptions. 

Businesses may be required to register for an Australia Business Number (ABN) or another identifier to enable the government to track and verify GST & BAS lodgments.

Personal Income Tax: In terms of Personal Taxation, Australia separates into categories to those whose income is taxable:

a) Resident Tax Rates: According to the Australian Taxation Office for 2020-2021:

b) Foreign Residents Tax Rates:

Taxable Income	Tax on this Income
0 - $120.000	32.5 cents for each $1
$120,001 - $180,000	$39,000 plus 37 cents for each $1 over $120,000
$180,001 and over	$61,200 plus 45 cents for each $1 over $180,000

Investment Potential: 10

There are generally no tax breaks for companies investing in Australia. However, the government has still created a series of investment measures and programs aimed at creating new businesses and attracting foreign capital. These investment programs are presented as visas for those who have the means and capabilities to implement. Each visa has different coverage and requirements, designed to recruit foreign staff with skills who want to set up or expand their business in Australia.

Australia provides a safe and low-risk environment for investment and business. Its resilient economy, globally significant industries, openness to the world, and stability make the biggest islands in the world, a great place to put your money. Before 2020, the economy experienced just two years of negative growth during the previous six decades. And since the last recession in 1991, the growth rate has averaged 3.2 percent, which is higher than every other major developed economy in the world.

The energy and resources sectors provide 75% of the exports by 2019. Australia has begun to invest to improve the fields of interest for foreign investors. Agriculture, resources and energy, health, digital economy, infrastructure, and tourism are just a few of the areas where this country has had significant growth in recent years.

Australia understood and really paid attention to the importance and benefits of foreign investment in the national economy and its nationals’ lifestyle. This kind of investment boosts the economy, makes itself grow, creates new jobs, and aims for modernization. It helps to power Australia’s leading industries, support local businesses, develop infrastructure, and of course, fosters competitiveness, a key element in a free economy.

Australia is land for opportunities. The present situation in the world with the Covid-19 outbreak, and the way this country has faced it, being one of the first in reactivating its economy, gives signs of stability, trust, and well-executed plans. Besides, it’s full of opportunities for skilled overseas workers who can take with them innovation and several profits for Australian business and economy.

At Mundo, we are attentive to the evolution of the global business situation to provide you with the best information and guidance when the time of making your next investment comes.

Mundo’s Australia Freedom Rating: AAA 38/40

Contact us