Corporate Treasury & Cash Management in Australia

Corporate Treasury & Cash Management in Australia

At a glance

About Australia 

Australia is the 13th largest economy in the world. A strong rule of law, a transparent and structured political system, and an openness to foreign competition within multiple industries have established Australia as one of the most attractive destinations for foreign investment. This is further compounded by a strong domestic market, as well as a skilled labour force. In terms of per capita gross domestic product (GDP), Australia ranks in the top 20 in the world, according to the World Bank’s 2020 figures. 

The mining industry in Australia has been on an upward trend over the past decade. Australia is one of the world's largest producers of coal, iron ore, alumina, lead and zinc. There is high demand from China, Japan, South Korea and the US for Australia’s commodities, including both hard commodities and soft ones such as agriculture.  

The country’s banks are supported by efficient regulatory frameworks and an established financial system; collectively they reinforce Australia's status as an attractive investment destination.  

Corporate Treasury in Australia 

Australia has sound banks, a highly skilled English-speaking workforce and close ties with the rapidly growing Asia-Pacific region. In this section, we highlight some of the key benefits the country offers to treasury and cash management

Financial Market Development 

  • Sydney is ranked 18th in the 2021 Global Financial Centres Index by Z/Yen Group, up 14 places compared with the previous year. Melbourne is ranked 23rd.  
  • Australia has a highly skilled English-speaking workforce, excellent business infrastructure, a stable political system and a sound legal environment. 
  • There are no general restrictions on moving money in and out of Australia. 

Sophistication of Banking Systems 

  • There are 40 domestic banks in Australia, with the sector dominated by four large banks. There are also seven foreign subsidiary banks and nearly 50 branches of foreign banks. 
  • Australia’s foreign-exchange market accounts for 1.4% of average daily global turnover, according to the Bank for International Settlements. 
  • Australia has an established debt market. Government securities, semi-government securities, corporate bonds and kangaroo bonds—Australian dollar-denominated bonds issued by non-resident companies—are all available. There is more than AUD1 trillion of outstanding corporate bonds.   

Regulatory Bodies 

  • The banking industry is regulated by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. The Reserve Bank of Australia is the central bank.   


  • The corporate income tax rate is 30%. For companies with an aggregated turnover threshold of less than AUD50 million and where no more than 80% of their assessable income is passive income, the corporate tax rate is reduced to 25% in the 2021/22 tax year. 
  • Resident companies are taxed on worldwide income. Non-resident companies are generally taxed on Australian-sourced income. 
  • The profits of a branch of a foreign company are taxed at the same rate as resident company profits. There is no branch profit-remittance tax on the remittance of profits to the head office by the branch of a foreign company. 
  • The standard rate for Goods and Services Tax (GST) is 10%, with certain goods and services being zero-rated whilst others are exempted. 
  • Capital gains are generally assessed with ordinary income and are subject to corporate income tax. 
  • Interest expenses that are used for business purposes are generally tax-deductible. However, the deductibility of the interest may be restricted when the company’s allowable debt level exceeds the safe-harbour debt-to-equity ratio of 1.5:1, unless it can satisfy the arm’s length test.   
  • Resident companies are not subject to withholding tax (WHT). WHT of 30% is charged on dividends and 10% WHT is charged on interest for non-resident companies where no treaties are in place. Rates range from 0% to 30% for dividends and from 0% to 25% on interest where a tax treaty is in place and the non-resident company can provide the Certificate of Residence.  
  • All states and territories impose a stamp duty on a wide variety of transactions at different rates. 
  • Australia has tax treaties with more than 45 countries and territories. 
  • The Australian government has enacted a range of measures to address tax avoidance in Australia by multinational companies with global revenue of more than AUD1 billion. 
  • Australia is a signatory to the Organisation for Economic Co-operation and Development’s Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises. 

  Benefits for Regional Treasury Centres 

  • Australia has strong economic and cultural ties with the fast-growing Asia-Pacific region, as well as overlapping trading hours.   
  • Australia is developing as a renminbi settlement hub for the Asia-Pacific region. 
  • Australia has a liquid foreign-exchange market and the necessary clearing and settlement systems to facilitate smooth financial transactions. 
  • It is a member of the Asian Payment Network, a common payment settlement platform within the Asia-Pacific region. 
  • Domestic and cross-border notional pooling and cash concentration are permitted for resident and non-resident companies. 

Bank Accounts  

  • Residents may hold foreign-exchange and domestic-currency accounts domestically and overseas. Domestic-currency accounts are freely convertible to foreign currency through a licensed dealer. 
  • Non-residents may hold foreign and domestic currency accounts. Domestic-currency accounts are freely convertible to foreign currency through a licensed dealer. 
  • Interest is available to resident and non-resident bank accounts. 

  Legal and Regulatory  

  • The Australian Prudential Regulatory Authority (APRA) oversees the banking sector. 
  • The Australian Securities and Investment Commission (ASIC) regulates consumer credit activity. 
  • A company is resident if it is incorporated in Australia or it carries out its head office activities and control in Australia or the voting power is held by shareholders who are resident in Australia. If a company continues business in Australia but is not physically present there, it may be registered as a foreign corporation with the Australian Securities and Investments Commission. 
  • Australia has anti-money laundering and counterterrorism-financing legislation in place. 
  • Australia is a member of the Financial Action Task Force (FATF) and has set up a financial intelligence unit, AUSTRAC, which is a member of the Egmont Group. 

Payment Systems 


(Reserve Bank Information and Transfer System) 

Australia's National Real-time Gross Settlement (RTGS) system 

  • Operated by the Reserve Bank of Australia (RBA). 
  • Final settlement is done through exchange settlement accounts (ESAs) at the RBA. Supports the settlement of other interbank transactions on a net deferred basis. 
  • 102 licensed bank participants (required to hold ESAs with the RBA) and 65 non-banking participants. 
  • Processes participants' transactions in the securities settlement systems, Austraclear and the Australian Stock Exchange's Clearing House Electronic Sub-register System (CHESS). 
  • Final settlement done for participants' net balances from other clearing houses. Settles interbank transactions in real time and with immediate finality. Also includes the Fast Settlement Service (FSS) used in conjunction with the New Payments Platform. 

Australian Payments Network (AusPayNet) 

(formerly Australian Payments Clearing Association (APCA) 

Payment systems regulator 

  • Industry-led organisation that administers best-practice methods. 
  • 102 participants including RBA. 
  • Supervises and co-ordinates the main clearing systems, which are listed below:  


(New Payments Platform) 

Low-value payment system 
  • Launched in 2018. Provides basic infrastructure for businesses, consumers and government departments to make and receive fast, efficient payments. 
  • Payments cleared and settled in near-real time (approx. 25 seconds to one minute) on a 24/7/365 basis, even when payer and recipient have accounts with different banks, using email address or phone number (the PayID addressing system) instead of account number or Bank State Branch (BSB).  
  • Developed collaboratively by NPP Australia Ltd. and 13 financial institutions. Allows other financial institutions to connect to the Platform via the initial participants. 
  • Over 97 institutions currently offer PayID and Osko through the NPP. 
  • NPP released a QR code standard and is working with banks and merchants for potential applications including bill payment, invoices, e-commerce and point-of-sale (POS) payments. 


(High Value Clearing System) 

Electronic high-value exchange and multilateral net settlement system 

  • Processes high-value and urgent interbank transfers (up to AUD10 billion), mainly for the AUD portion of foreign-exchange transactions. 
  • Payments exchanged in real time and with immediate effect utilising the SWIFT Payment Delivery System (PDS) and then settled individually using RITS. 
  • To settle transactions, participating financial institutions must hold an ESA within RITS. 
  • There are 49 participants, including the RBA. 


(Australian Paper Clearing System) 

Interbank cheque and paper-based exchange and settlement system 

  • Processes AUD-denominated cheques and MICR-encoded paper-based payments (no value threshold). 
  • Is a deferred net settlement system. 
  • Transactions settled on a next-day basis and on the same day through BECS. 
  • Final settlement done through Australia's low-value clearing systems across participants' ESAs held at the RBA. 
  • There are 95 participants, including the RBA. 


(Bulk Electronic Clearing System) 

Interbank bulk electronic exchange and settlement system 
  • Processes low-value electronic transactions (including regular direct debits and direct credits, as well as payroll, supplier and third-party payments) for consumers and businesses. Maximum value is AUD100 million. 
  • Is a deferred net-settlement system, also known as ‘Direct Entry’. 
  • Commonly used for regular salary and social security payments. 
  • Transactions settled on a next-day basis and on the same day through BECS. Final settlement done through Australia's low-value clearing systems across participants' ESAs held at the RBA. 
  • There are 82 participants, including the RBA. 


Payment Instruments 

Credit Transfers 

  • Paper-based or automated, although they are mostly automated. 
  • High-value and urgent electronic credit transfers cleared and settled through HVCS in real time. 
  • Low-value, non-urgent and bulk electronic-credit transfers settled through BECS on the same day. Used for payroll, supplier and third-party payments. 
  • Low-value and urgent electronic transfers cleared and settled through NPP in near real time. 
  • Paper-based credit transfers processed through APCS. 

Direct Debits (auto debits) 

  • Used for low value, recurring payments such as utility and insurance bills. 
  • Arranged via a Direct Debit Request (DDR). 
  • Processed through BECS on the same day and coordinated by AusPayNet. 

Card Payments 

  • Credit and debit card payments are the most widely used form of electronic payment in Australia, representing over half of all payments. 
  • Recent surveys show that consumers are using cards for small as well as large transactions, largely due to the growth in contactless (tap-and-go) payment systems. 
  • Debit card transactions, used for 70% of all card purchase volume, increased by 9.2% to a value of AUD364.2 billion in FY20, while credit card transactions decreased by 3.5% to a value of AUD324.3 billion. 
  • The main card brands are Visa and MasterCard, in addition to American Express, JCB and Diners Club, all of which are Europay-, MasterCard- and Visa (EMV)-compliant. The main debit card payment system is Electronic Funds Transfer at Point of Sale (EFTPOS), owned by EFTPOS Payments Australia Ltd., which has a national network made up of seven proprietary networks. 

Online Payments 

  • Allows consumers to pay for goods and services or transfer money via payment systems that link to a credit card or bank account. 
  • Common online payment options in Australia include BPay, PayPal and POLi. 
  • Local banks have teamed up with global mobile wallets—such as ANZ with Apple Pay and Westpac with Google Pay—while retailers such as Myers and Coles have launched digital wallets that connect reward and card accounts on a single app. Mobile wallets can also be found on wearable fitness devices, such as FitBit Pay and Garmin Pay, or connected through food and beverage (F&B) order app like the popular Hey You and Ritual. 
  • The e-commerce market in Australia is worth over AUD46 billion, a quarter of which is mobile commerce. 
  • ASIC has a regulatory sandbox framework applied to financial technology (fintech) companies. The government has allocated funding to support and promote the development of the fintech industry, such as facilitating open banking and researching how to best utilise blockchain technology. 

Digital Currencies 

  • Australia has a thriving cryptocurrency market and the government has introduced regulations which require digital currency exchanges to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC), as a means of preventing money laundering and terrorism activities. 
  • Cryptocurrencies are legal tender in Australia. Taxation varies depending on the amount bought or sold, the use and whether any profits have been earned.  

Cash, Cheques and Money Orders 

  • The overall rise of cashless systems has caused both cash and automated teller machine (ATM) use to plummet, with the number of ATMs decreasing by 15% to 28,000 since 2016. Cash payments continue to decline, with it being used for 27% of all retail transactions in 2020. ATM withdrawals dropped 19% from 2019 to 2020. 
  • Cheque use is also in decline (dropping by 21% from 2019 to 2020) due to the increased use of electronic payments. However, cheques are often used for commercial payments, equating to 60% of all cheques used, and for specific transactions such as property settlements. 
  • Processed through the APCS, with final settlement through RITS. Funds are usually available within three days. 
  • Australia Post offers the Western Union remittance service at its branches. 

For more information, login to Treasury Prism for contextual insights on market regulations that are relevant to your cash management structure.

Sources (Intro & Corporate Treasury):  
IMF, Global Finance Magazine, World Economic Forum, PwC, Australian Prudential Regulation Authority, Bank for International Settlements, Deloitte, DBS, Reserve Bank of Australia, Trading Economies 

Sources (Banking & Payments): 
DBS, Reserve Bank of Australia, Australian Payments Network, New Payments Platform, Venture Insights, Cognizant, eftpos Australia, J.P. Morgan

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