Setting up an Australian subsidiary from Japan

A Japanese company entering Australia usually forms a wholly owned Pty Ltd. That company needs at least one director who ordinarily lives in Australia under section 201A of the Corporations Act. The good news for Japanese groups is structural. A comprehensive tax treaty has been in force since 2008, Japan sits in the higher FTA-partner FIRB band for most business acquisitions, both countries use apostilles, and Tokyo and Sydney are only one or two hours apart.

The difficulties are less about law and more about how Japanese groups staff overseas subsidiaries.

The expatriate rotation problem

When a Japanese parent sends a manager from head office to run the Australian business, that person often becomes the local director. That can satisfy s201A while they live here, because the test is ordinary residence, not citizenship. Our guide to who can be a resident director covers the edge cases.

The problem arrives at the end of the assignment. When the manager returns to Japan, the company may be left with directors who all live overseas, and it is out of compliance from that day. If the departing director was the only one on the board, Australian law won't let them resign and leave the company with no directors at all.

Three ways Japanese groups handle it:

1. Keep an independent resident director permanently, so expatriates can rotate without touching compliance.
2. Overlap assignments, appointing the incoming manager before the outgoing one resigns, and lodging both changes with ASIC within 28 days.
3. Use a professional director as a bridge while head office chooses the next appointee.

The first option costs more each year but removes the cliff edge. The second works only if the visa and arrival dates line up, and they often don't.

Tax treaty position

According to Treasury's income tax treaties list, Australia and Japan have a comprehensive tax treaty in force. The current convention was signed on 31 January 2008 and entered into force on 3 December 2008. It replaced the 1969 agreement, and it is modified by the OECD Multilateral Instrument, which entered into force for this treaty on 1 January 2019.

The treaty affects withholding on dividends, interest and royalties paid from the Australian subsidiary to the Japanese parent, among other things. The rate that applies depends on the shareholding and the facts, and the treaty contains anti-abuse rules. Ask your tax adviser to confirm the position before the first dividend or royalty payment. We don't give tax advice.

Separately, the Japan-Australia Economic Partnership Agreement (JAEPA) has been in force since 15 January 2015, according to DFAT.

FIRB thresholds for Japanese investors

Japan is on the list of "certain FTA partners" in the 2026 monetary thresholds table, which took effect on 1 January 2026. For private Japanese investors, key thresholds include:

Two points catch Japanese groups out:

• The acquirer must be formed in Japan. The table's footnote says an investor buying through a subsidiary incorporated in another jurisdiction gets that jurisdiction's thresholds. A purchase made by a group's Singapore or Hong Kong regional holding company is assessed on those countries' terms, not Japan's.
• Government-linked investors get no threshold. Foreign government investors are at $0 for most acquisitions. If any part of your shareholder chain involves a Japanese public body, ask your FIRB adviser early.

Our FIRB basics guide explains when approval is needed. We don't handle FIRB applications.

Documents from Japan

Japan has been a party to the Apostille Convention since 27 July 1970, and Australia since 16 March 1995, according to the HCCH status table. A Japanese public document, such as a government-issued certificate, can therefore be authenticated with an apostille rather than consular legalisation.

For our own identity checks, documents can be certified by a notary or another authorised person in Japan. Anything not in English needs a certified translation. If your group evidences internal approvals with a company seal, note that Australian consents and ASIC forms are completed by individual signature. Budget time for each director to sign personally.

Signing across the Tokyo–Sydney gap

Tokyo runs on UTC+9 all year. Sydney and Melbourne are on UTC+10 from early April to early October, then UTC+11 during daylight saving. So Sydney is one or two hours ahead. Perth, on UTC+8 all year, is one hour behind Tokyo, and Brisbane is one hour ahead year-round.

In practice, this is one of the smallest time gaps of any major investor country. A board resolution circulated at 9am in Sydney reaches Tokyo directors at 7am or 8am their time, and can be signed the same business day. The real delays come from internal approval chains at head office, so build them into deadlines such as the two-month window for the annual solvency resolution.

Aligning the year end

Australia's default tax year ends on 30 June. Where the Japanese parent uses a different balance date, the subsidiary can apply to the ATO for a substituted accounting period. The ATO lists synchronising with the controlling entity of your group as a recognised reason, and says it aims to decide within 28 days. Say the parent closes on 31 March: aligning the subsidiary saves the group a second set of closing accounts each year. Your tax agent lodges the application.

Whether the subsidiary must also lodge financial statements with ASIC depends on its size and group, as covered in our guide to financial reporting for foreign-controlled companies.

Setting up: the sequence

1. Parent board approves the subsidiary and its first directors.
2. Each director obtains a Director ID before appointment. Directors without Australian identity documents usually apply on paper, which takes longer. See our Director ID guide.
3. The resident director gives written consent, and the company is registered with ASIC (fee $636 in 2026–27).
4. ABN, TFN and GST registrations follow, then the bank account.

The full sequence for corporate parents is in our subsidiary setup guide. Our packages, including a stable resident director that doesn't rotate with your expatriate postings, are on the pricing page.

General information only, current at 27 October 2026, and not legal, tax or financial advice for your group.

General information about Australian law and practice, not legal or tax advice for your circumstances. Check the official sources, or ask your adviser, before you act.