A Canadian company can register a branch in Australia (ARBN, local agent) or set up an Australian Pty Ltd subsidiary, which needs a director who lives in Australia. The Canada-Australia tax treaty limits withholding on unfranked dividends to 15% (5% on franked dividends to a 10% corporate shareholder), interest to 10% and royalties to 10%. As a CPTPP partner, Canadian private investors get the higher $1,498 million FIRB threshold for non-sensitive businesses.
Canadian technology, resources and professional services firms often choose Australia as their first Asia-Pacific market: a common law system, similar business culture, and a time zone that covers Asian customers. This guide covers the structure choice and the Canada-specific tax points. For the general process, see our guide to registering a business in Australia.
Branch or subsidiary
| Registered branch | Pty Ltd subsidiary | |
|---|---|---|
| Legal entity | Your Canadian company, registered with ASIC (ARBN) | A separate Australian company (ACN) |
| Local officer | A local agent resident in Australia | At least one director who lives in Australia |
| Liability | The Canadian company is directly liable | Limited to the subsidiary |
| Annual ASIC filings | The Canadian company's financial statements (Form 405) and annual return (Form 406) | Annual review; financial reports only if large or not covered by relief |
| Our fee | From $1,500 (+ $636 ASIC fees) | From $900 (+ $636 ASIC fees) |
Most Canadian companies with Australian staff or customers choose a subsidiary. A branch exposes the Canadian company's own accounts and liabilities to Australia. See branch vs subsidiary.
The Canada-Australia tax treaty
The 1980 treaty (amended by the 2002 protocol and the multilateral instrument) sets these limits on Australian withholding tax paid to Canadian residents:
| Payment | Treaty rate |
|---|---|
| Dividends | 15%. 5% for a company holding at least 10% of the voting power, but only to the extent the dividends are fully franked (a 365-day holding period applies) |
| Interest | 10% |
| Royalties | 10% |
| Branch profits | Additional tax capped at 5% |
Australia does not withhold on fully franked dividends under its own rules, so in practice the rate that matters is 15% on unfranked dividends to a Canadian parent. Without a treaty, unfranked dividends and royalties are withheld at 30%. For other countries' rates, see our double tax agreements guide.
Canadian foreign affiliate rules
For the Canadian parent, an Australian subsidiary will usually be a foreign affiliate. Because Canada has a tax treaty in force with Australia, Australia is a designated treaty country under the Canadian regulations, and active business income the subsidiary earns there can form part of its exempt surplus. Dividends paid out of exempt surplus are generally deductible to the Canadian corporation (s113 of the Income Tax Act). A branch does not get this treatment in the same way, which is one reason Canadian groups often prefer a subsidiary. Confirm the position with your Canadian tax adviser.
Staff and secondees
Canada and Australia have a social security agreement, but it deals with pensions: Canada is not one of the countries whose certificates of coverage exempt seconded employees from the Australian super guarantee. A Canadian employee working in Australia will generally need 12% super paid on top of salary. See employing staff in Australia without an entity and employer of record if you want to hire before the company is set up.
Foreign investment (FIRB)
Canada is a party to the CPTPP, so Canadian private investors get the higher threshold for acquiring a substantial interest in a non-sensitive Australian business: $1,498 million from 1 January 2026 ($347 million for sensitive businesses). Unlike New Zealand and the US, Canada does not get the higher agricultural land threshold. See our FIRB guide.
Getting set up
- Directors apply for director IDs (on paper if they live outside Australia; allow several weeks).
- Register the Pty Ltd or branch with ASIC.
- Apply for ABN, TFN and GST; register for PAYG withholding if hiring.
- Open an Australian bank account; see banking for foreign companies.
- Set up payroll, super and workers compensation for Australian staff.
Frequently asked questions
What is the dividend withholding tax rate from Australia to Canada?
Under the Canada-Australia treaty, 15% on unfranked dividends. A 5% rate applies to a company holding at least 10% of the voting power, but only to the extent the dividends are fully franked, and fully franked dividends are not subject to Australian withholding tax anyway.
Does a Canadian company need an Australian resident director?
For an Australian Pty Ltd subsidiary, yes: at least one director must ordinarily live in Australia. A registered branch needs a local agent in Australia instead.
Is Australia a designated treaty country for Canadian foreign affiliate purposes?
Yes. Canada has a comprehensive tax treaty in force with Australia, so active business income of an Australian foreign affiliate can generally contribute to exempt surplus.
What is the FIRB threshold for Canadian investors?
As a CPTPP partner, Canadian private investors are screened above $1,498 million for non-sensitive businesses and $347 million for sensitive businesses, from 1 January 2026.
This content is general information only and is not legal, financial or tax advice. Laws and regulations change often. For advice on your circumstances, speak to a qualified adviser.