Free trade area

ASEAN-Australia-New Zealand FTA (AANZFT) 2009

The Free Trade Area agreement was signed in February 2009, covering the trade of goods, services, investment, competition and intellectual property rights, making Australia a good opportunity to export to.

It also includes specific schedules of commitments on changes to tariffs, specifically that tariffs will be progressively reduced from entry into force of the Agreement, and eliminated for at least 90% of all tariff lines within specified timelines.


collecting payments

Collecting payments in Australia

The payment behaviour of domestic companies is good compared to international standards. However, a deteriorating trend is being seen on delays, with average days sales outstanding (DSO) now standing at 50 days.

The court system is complicated by the country‘s federal structure and provides no fast-track proceedings for the settlement of undisputable claims. The courts are otherwise efficient, but delays and costs tend to be significant, and enforcing foreign judgments may prove difficult.

Insolvency proceedings are complex and expensive, with chances of recovery very low.


financial info

Availability of financial information

Relevant financial information on domestic companies is difficult to obtain for several reasons. Firstly, only stock exchange listed companies have an obligation to publish their financials, therefore only 2% to 3% of Australian companies publish or publicly file annual or semi-annual records.

Secondly, corporations often rely on trust structures, which are not legal entities in their own right, but aim to limit visibility and accountability. The vast majority of Australian traders’ portfolio consists of small to mid- size companies, where financials are confidential and can only be obtained through a direct approach or from credit reporting agencies.


court system australia

The Court System in Australia

The court system in Australia is complex. Australia has a federal government structure which consists of two internal territories (the Northern Territory and the Australian Capital Territory), and six sovereign states with reserve powers.

Each has its own legal system and laws, which sometimes adds complexity, despite ongoing efforts to create one approach. There are no specific tribunals for commercial matters, but there are certain specialized divisions within existing courts.

Depending on the value of the claim and the cause of action, large commercial disputes are usually brought to the Federal Court of Australia (the FCA sits in all capital cities), or to the Supreme Court in one or another territory.

As a general rule, Local Courts or Magistrates Courts (names may vary from one state to another), are capable of deciding on claims up to AUD 40,000 in South Australia, AUD 100,000 in Victoria and New South Wales, or AUD 150,000 in Queensland. District Courts are able to decide on claims up to AUD 750,000, whereas Supreme Courts handle claims in excess of AUD 750,000.


Handling insolvent debtors

Handling insolvent debtors

Insolvency in Australia is merely a cashflow matter and Section 95A of the Corporations Act 2001 (Cth) states that a company remains solvent if (and only if), the company is able to pay all its debts when they become due.

Insolvency proceedings are expensive and complex, so are usually used as a last resort. However, the National Personal Insolvency Index (a public register in electronic format), provides a list of insolvent companies.

Therefore, the threat of initiating insolvency proceedings (through a statutory demand letter), may constitute an effective means of pressure while collecting unpaid debt. In practice, insolvency proceedings tend to follow a final judgment or result from the debtor’s failure to comply with a statutory demand within 21 days (in which case proceedings occur before the Federal Court).

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