Section 1 of Doing Business in Australia

Australia's governments and legal system

What is the legal system in Australia? 

Australia (also known as the Commonwealth of Australia) is a federation formed in 1901 with six states (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania), two territories (Northern Territory and Australian Capital Territory) and a number of small external territories. Australia inherited its system of government from England, based on the Westminster parliamentary model.

Australia has three levels of government – federal, state or territory and local (shown in the diagram below). Foreign companies doing business in Australia must comply with laws made by all three levels of government. A business operating in a number of states and territories also needs to be aware that applicable state/territory laws can be different from each other, so the business may have to comply with different arrangements in different states or territories.

The three levels of government and their responsibilities




The Commonwealth Parliament derives its powers from the Australian Constitution. Its responsibilities are limited to specific subject areas (although these are still very broad).

Federal laws prevail over state and local laws to the extent of any inconsistency.

The Commonwealth Parliament also has the power to make laws (or override territory laws) in respect of the Northern Territory and the Australian Capital Territory.

  • Corporations Act
  • Antitrust / Competition
  • Income Tax
  • Banking
  • Employment
  • Climate / Environment
  • Insurance
  • Foreign Investment Approvals
  • Immigration
  • Infrastructure
  • Goods and Services Tax
  • Education
  • Financial Services
  • Health
  • Intellectual Property

State and territory parliaments have the power to pass laws for any purpose, except for certain purposes that have been specifically reserved for the Commonwealth Parliament under the Australian Constitution or referred by each of the states to the Commonwealth Parliament.

Although there is broad similarity among some state and territory laws covering the same subject matter, there can be important differences which affect the ease and cost of doing business across many states and territories.

  • Stamp Duty
  • Payroll Tax
  • Land Tax
  • Energy
  • Mining
  • Competitions
  • Planning
  • Health
  • Education
  • Infrastructure
  • Transfer of Land
  • Employment / OH&S

Local governments are in charge of “local” issues. Their powers are usually limited and are primarily focused on providing services for local residents and businesses.

  • Building Approvals
  • Planning
  • Local Roads
  • Local Services (parks, libraries)

Important regulatory bodies 

Some of the important regulatory bodies in Australia are:

  • the Australian Securities and Investments Commission (ASIC) which administers the Corporations Act 2001 (Cth) (Corporations Act) and its regulations;
  • the Australian Competition and Consumer Commission (ACCC) which monitors competition, fair trading and consumer protection issues. It principally administers the Competition and Consumer Act 2010 (Cth) (CCA) which covers, among other things, anti-competitive practices, merger clearances, consumer protection and product safety and liability;
  • the Australian Taxation Office (ATO) which is the statutory authority responsible for administering the Australian federal tax system. It administers the process of annual self- assessment of income tax and GST and conducts reviews and audits. It is also responsible for the tax aspects and regulation of Australia’s superannuation system;
  • the Australian Securities Exchange (ASX) supports equities, derivatives and enterprise trading markets. It applies the ASX Listing Rules and ensures companies comply with certain disclosure and market awareness obligations; and
  • the Australian Prudential Regulation Authority (APRA) is a statutory authority to promote prudent management of financial institutions. It regulates banks, life insurance companies, building societies, credit unions, friendly societies and superannuation funds.


This guide is current as of April 2021.