The internet is fast becoming Australia’s most popular shopping destination - 48% of Australians made online fashion purchases in 2012. A recent survey showed Australians spent the equivalent of £7.3 billion shopping online last year, up by 23 per cent from 2011. British companies such as ASOS and Topshop have already found firm footing in this high demand market and have opened the doors for other UK fashion labels to be successful here. This presentation outlines the current opportunities and trends as well as tips on how to sell online effectively to Australia.

1. Fashion – Selling Online to Australia
Joanna Olivera, Trade Development Manager

2. 2
Presentations
- UKTI Australia: Joanna Olivera, Trade Development Manager
-
General overview of Australia
E-commerce and Fashion sectors in Australia
Trends and Drivers behind growth of e-commerce
Adapting the way you sell
How can we help?
- Guest presenter: Ned Shelton, Founder and Managing Director, Starting
in Australia Pty Ltd
- Q&A session

3. 3
Why Australia?
- Over 1,000 UK companies
- Very similar business, legal and regulatory
culture
- Best performing OECD country economically,
with good growth prospects
- Sophisticated, literate and multicultural
market
- Strong Australian dollar making UK goods
and services more affordable
- Closely linked to fast growing Asia-Pacific
nations

4. 4
An Overview of Australia
- Australia is an island continent and the
world’s sixth largest country
- Population is 23 million
- All states/territories have separate
governments, sitting under federal
government with regulations varying
between them
- Largest and most populous cities are
Sydney and Melbourne
- Capital city - Canberra

5. 5
Overview of E-Commerce in Australia
- Shift from traditional retail to online retail
- Australians spent AU$14.2 billion in 201213
- AU$7 billion was spent on overseas
online shops last year
- Australia has over 16 million people
active online
- 62% of online users purchase goods and
services online on a regular basis
- The Australian uptake to E-Commerce
has been very fast
- Online sales grew 90% from 2010 to 2011

6. 6
Opportunities for growth in E-Commerce
- Online sales in Australia are set to continue to
grow exponentially over the coming years due
to;
•
Roll out of National Broadband Network
•
Rise of M-Commerce – 53% of
Australian mobile users use a smart
phone
- Strong Australian dollar and rise in disposable
incomes

7. 7
Trends & Drivers behind E-Commerce
- Australian consumers are attracted
to online shopping for three main
factors;
1) lower prices
2) convenience
3) speed of delivery
4) a wider range of goods than
available from bricks and mortar
retailers
- Goods under AU$1000 bought
overseas do not attract 10% GST

8. 8
Fashion Sector
- Demand for niche products
- Shift away from mass manufactured and
standardised products
- Demand for quality and uniqueness
- Reflects popularity of mid-price and high-price
niche items
- Strong growth in menswear and childrenswear
- Australians have demonstrated a strong appetite
for foreign brands

9. 9
UKTI Australia
Adapting the way
you sell

10. 10
Adapting your website for Australia
- Simplify customer service processes
- Forms need to allow for international addresses and information, e.g. post
codes
- Answer enquiries promptly and be mindful of time difference
- Keep website and product listings up-to-date
- List prices in AUD and note that Australia uses the metric system

11. 11
Adapting the way you sell
-Companies that ‘internationalise’ their
websites dramatically increase their chances
of obtaining overseas business
- Credit card payments are popular and other
secure payment systems, such as PayPal are
becoming increasingly common
- Focus on site security

12. 12
Shipping and Returns
- Seamless checkout to reduce shopping cart abandonment
- Clear information on time frame for delivery and cost
- Companies offering free or reduced cost freight generally have an advantage
over their competition
- Efficient and clear returns policies

13. 13
Fulfillment Houses
- A solution for companies is to
use the services of a fulfillment
house to distribute product orders
- Viable for the companies with
strong market demand
- Note that it is rare for a
fulfillment company to provide its
own courier services

14. 14
Local Factors
- A British company does not need to have
an Australian Business Number (ABN) to
sell products to Australia online
- Australian domain names cannot be
reserved.
- A company must register its business to
operate in Australia and then will have an
Australian Company Number to have a
com.au address
- Goods and Services Tax (GST), at a rate
of 10%, applies to most imported goods
over a A$1,000 threshold

15. 15
UKTI Australia
How we can help?

16. 16
How can UKTI help your business?
- Carry out in-depth research on the
market and research local contacts to
your specifications (OMIS)
- Help you attend trade fairs and
missions
- Product launches and PR and
marketing support
- Whatever you need to succeed in the
market!

17. 17
E-Commerce Sector Report
- A detailed sector report which
expands on the topics featured in
this presentation may be purchased
from UKTI Australia
- Features trends, tips on selling to
Australia and Case Studies
- Will provide a background that will
allow you to make a reasoned and
logical analysis of opportunities and
the realistic potential for your
product in Australia

18. 18
Contact Details
Further information:
Joanna Olivera
Trade Development Manager
UKTI Australia
Email: joanna.olivera@fco.gov.uk
- Ask questions at the end of this
webinar or follow the conversation on
LinkedIn
- Keep in touch with the latest
Australian business opportunities
- Follow us on twitter @uktiaustralia

19. 19
Guest Presenter:
Ned Shelton
Founder and Managing Director
Starting in Australia Pty Ltd

20. 20
Q & A Session
Joanna Olivera
Trade Development Manager
(Creative Industries, Fashion and ECommerce)
UKTI Australia
Email: joanna.olivera@fco.gov.uk
Ned Shelton
Founder and Managing Director
Starting in Australia Pty Ltd
Email:
N.Shelton@StartingInAustralia.com.au

21. UKTI: Selling on-line to Australia –
23 October 2013, from 9.30am (UK time)
By Ned Shelton
Managing Director, Starting in Australia Pty Ltd
N.Shelton@StartingInAustralia.com.au
www.StartingInAustralia.com.au
www.SheltonsGroup.com
Phone +61 2 9089 8792
© Ned Shelton 2013
21

22. ‘Sheltons’ &
‘Starting in Australia’
Sheltons – established in 1994 in Europe
 Offices in Denmark, Cyprus, Malta and Australia
 Areas

 Sheltons International Tax Training Institute (SheltonsSITTI)
 Local and international tax
 Corporate services (all accounting, company secretarial
work, tax, legal and accounting compliance, providing
directors, registered office, company secretary, ++)

Australian office (Sydney) – not ‘Sheltons’ but
‘Starting in Australia’
www.StartingInAustralia.com.au
22

23. Starting in Australia Pty Ltd
Working exclusively with foreigners doing
business in Australia – existing and planned
 Services





Tax advice & compliance, legal and company secretarial
Full range of accounting services, GST & payroll admin
Providing local director and public officer
Business advice, intro to trusted partners & suppliers +
Specialists – many specific issues apply to
inward investor, not known to locally operating
advisers
 Independent – work well with your UK
accountants and lawyers
 Understand the UK (and many other countries)
 Cost efficient – one stop but specialist shop

www.StartingInAustralia.com.au
23

24. Selling on-line - phases

Pure export – do nothing
 Customs and GST issues
 AUD 1,000 exemption – per consignee/addressee
 No GST on import if GST-free in Aus (e.g., wheelchairs,
food, clothing)
 Customs duty important
 GST payable at customs clearance – unless
arrangement made for monthly/quarterly payments in
arrears
www.StartingInAustralia.com.au
24

25. E-commerce - phases

Pure export – use .com.au domain
 Need an Australian entity or trade mark registered in
Australia
 Does not necessarily cause profits to be taxable in
Australia
 Useful (in searching) – and in reassuring the Aus
customer

Pure export – use .com.au domain + marketing
in Australia
 Normally still not taxed in Australia on profits– even if
have own full-time staff here conducting marketing
www.StartingInAustralia.com.au
25

26. UK vs Australia – company tax
Australia – 30% (flat, not progressive)
– Applies to Aus subsidiary’s profits and to Aus branch’s
profits
– Proposed reduction to 28.5%
UK – 23%
– 1 April 2013, 23% (21% from 2014 and 20% from
2015)
– small profits rate (SPR) 20%
Australia – pay about 50% more in tax than the
UK
Typical planning: earn the profit in the UK rather
than Australia
www.StartingInAustralia.com.au
26

27. Branch (‘permanent
establishment’)
UK
Australia
www.StartingInAustralia.com.au
ABC Ltd
ABC Ltd has a
branch in Aus
Branch
27

28. Branch (‘permanent
establishment’)






Taxed at 30%
Do you have a branch (‘Permanent
establishment’ (PE)) in Australia – deliberately
– or accidently? It matters.
‘A branch’ – general term, often used in the
context of company law
‘Permanent establishment’ (PE) – a tax term
If UK business has a PE in Australia – taxed in
Australia on the ‘business profits’ (i.e. trading
profits) attributed to the PE
PE arises if there is a certain type of physical
presence in Australia
www.StartingInAustralia.com.au
28

29. Branch (permanent
establishment)

Examples of a PE in Australia (i.e. gives rise to
30% Australian tax on the profits):
 An office generally trading / carrying on business
 Selling through an (unrelated or related) agent – if
that agent is mainly working for the UK principal
 UK business ‘has a building site or construction or
installation project in [Australia] or supervisory or
consultancy activity [in Australia] connected with
such a site or project, but only if that site, project or
activity lasts more than 12 months;’

Example of no PE (no Australian tax):
 Export to Australia via unrelated importer
 Sales rep who simply introduces customers to the
UK business head office
 Renting a warehouse (for storage and delivery of
your goods)
 Have staff – if only performing marketing activities
www.StartingInAustralia.com.au
29

30. UK tax – re Australian branch
The profits from an Australian PE are most likely
exempt from tax in the UK if UK business is a UK
company
 What is best – to have a PE in Australia or not?

 UK corporate tax - lower than Australian tax
 Thus: best to not be taxed in Australia – thus only pay
23% or less in UK – rather than 30% in Australia
 Also: not being taxed in Australia means reduced tax
compliance burden in Australia, avoids ‘discussions’ on
transfer pricing, etc.
 (If the Australian tax rate was less than the UK, best to
have a PE here)
www.StartingInAustralia.com.au
30

31. Australian subsidiary
UK
Australia
www.StartingInAustralia.com.au
ABC Ltd
ABC Ltd has a
subsidiary in
Aus
ABC Pty Ltd
31

32. UK tax - with Australian
subsidiary
30% corporate tax (flat, no progression)
 Profits calculation roughly similar to UK company
 No dividend withholding tax on the distribution of
the 70 (i.e. 100 less tax of 30)
 UK Co potentially exempt from UK tax on the
dividend of 70 received (exemption method)
 Thus: from the 100 pre-tax Aus profits, UK Co
receives 70 cash > UK tax (of nil)
 Gain on sale by UK Co of shares in Australian
subsidiary – potentially exempt in the UK

www.StartingInAustralia.com.au
32

33. No PE vs. PE;
PE vs. subsidiary

UK corporate owner (of sub or PE), tax aspects:
 No PE preferred – less tax in total – and no/less
Australian tax compliance burden
 PE vs. subsidiary – little difference (30% Aus tax in
both cases, probably no UK tax on dividend from sub
or on PE profits)

UK corporate owner, non-tax aspects:
 Far easier to do business in the form of a subsidiary – if
significant interaction and transactions in Australia
(e.g. employing staff, renting property, marketing,
interaction with local customers)
 Running a business with no branch (PE) or with a
branch – cumbersome
 Costs (legal, tax, accounting) – best to have no PE; PE
vs. subsidiary: costs about equal
 Depends on the case
www.StartingInAustralia.com.au
33

34. Forming & running an
Australian company
Can be formed in a day / on the spot
 No minimum share capital needed
 Must have

 an Australian resident director (company law) and
 an Australian resident public officer (tax law)
Strict responsibilities for both
 Small companies

 do not need to prepare financial statements (FS)
 or be audited,
 ie annual accounts/FS do not need to be published with
ASIC (= UK Companies House)
Must always file tax returns
 GST (= VAT) quarterly for small turnover

www.StartingInAustralia.com.au
34

35. Relevant case study – 1/3
‘CoolClient’
UK Co – branded apparel (niche/prestige market)
 Initially - no effort put in to in selling in Aus, but
relatively strong on-line sales in Aus via UK site
 To capitalise:

 Started a subsidiary in Sydney
 Opened a shop in Sydney (planning for Melbourne)
 Held promotional events
 Managed to get in to some large national outlets
(department store and clothing shop chains)

Role of subsidiary/shop – primarily to promote
the direct sales form the UK company to
 a) direct on-line customers and
 b) via the national outlets
www.StartingInAustralia.com.au
35

36. Relevant case study – 1/3
‘CoolClient’ – how we assisted

One-off up-front work
 Advised on whether branch or subsidiary
 Formed the company (subsidiary)
 Provided Australian resident director and public officer
 Advised on important practicalities re import, GST,
customs duty
 Reviewed shop lease, arranged necessary insurances,
provided template for employment contracts, advised
on wages to be paid to shop staff
 Assisted developing systems and procedures re finance
and accounting
www.StartingInAustralia.com.au
36

37. Relevant case study – 1/3
‘CoolClient’ – how we assisted

On-going work
 GST (VAT) administration
 Monthly management accounts
 Fortnightly payroll administration
 Set up payments for approval in banking system
 Ad hoc advice and assistance (staff termination,
company car for senior employee, visa issues, tax
aspects of repatriation of profits, emergency assistance
after shop break in)
www.StartingInAustralia.com.au
37

38. Relevant case study – 2/3
‘HorseProductClient’
UK Co – special products for horse health
 Aim: to sell primarily on-line (to Australian horse
owners)
 Process

 Started a subsidiary in Australia
 Employed one sales person
www.StartingInAustralia.com.au
38

39. 
Relevant case study – 2/3
‘HorseProductClient’ – how we
assisted
One-off up-front work
 Formed the company (subsidiary)
 Provided Australian resident director and public officer
 Advised on important practicalities re import, GST,
customs duty
 Advised on how to urgently obtain an ABN
 Advised on fulfilment houses and logistics regarding
goods from overseas ordered by Australian customers
 Worked with Australian bank to facilitate on-line
payments
www.StartingInAustralia.com.au
39

40. 
Relevant case study – 2/3
‘HorseProductClient’– how we
assisted
On-going work (so far)
 Fine tuning import procedures (cash flow aspects,
ironing out hitches in the import process)
 GST (VAT) administration
 Regular compliance work
www.StartingInAustralia.com.au
40

41. Relevant case study – 3/3
‘Client C’
UK Co – selling Indian produced consumer
products
 Aim: to sell primarily on-line to Australian
consumers and to retail outlets
 Process

 Did not involve an Australian presence
www.StartingInAustralia.com.au
41

42. Relevant case study – 3/3
‘Client C’ – how we assisted

One-off up-front work
 Urgently obtained an ABN
 Fee: AUD 500

On-going work
 N/A
www.StartingInAustralia.com.au
42

43. Thank you,
that’s all for
this time!
© Ned Shelton 2013
43