Investing in Australia: An Overview of Channels and Basic Rules

Investing in Australia — a general framework

This article gives a broad picture of the common investment channels in Australia and the basic ideas that someone new to Australia, or not yet familiar with the Australian financial system, needs to understand. This article is not investment advice — every investment decision should be discussed with a licensed financial adviser.

Why investing in Australia differs from many other countries

Australia’s investment system has some distinctive features:

Superannuation is compulsory investing: Most people working in Australia are already “investing” through a super fund — that money is being invested in financial markets under the fund’s management. Understanding where your own super fund invests is the first step.

Franking credits (imputation credits): Dividends from Australian shares often come with franking credits — reflecting the company tax already paid. This reduces the tax burden for the individual investor receiving the dividend. It is a concept unique to Australia.

CGT discount: An individual who holds an investment asset for more than 12 months before selling may be eligible for the CGT discount — reducing the portion of the capital gain counted as taxable income. Check the specific conditions with an accountant.

Common investment channels

Shares: Buying shares in companies listed on the Australian Securities Exchange (ASX) or on international markets. You need a brokerage account. Income from dividends and capital gains when you sell are both subject to income tax.

Property: Investing in property to rent out (residential or commercial) is common in Australia. Related costs (loan interest, management, repairs) are usually deductible. First home buyers may be eligible for support schemes — check with your state or territory government.

Managed funds and ETFs: Funds let you invest in a diversified way without picking individual shares — suited to people who do not have time to research the market. An ETF (Exchange Traded Fund) is listed on the exchange and traded like an ordinary share.

Term deposits: Depositing money with a bank at a fixed interest rate for a set period — low risk, but with limited returns. Interest from a term deposit is taxable income.

Bonds: Government or corporate bonds — paying periodic interest and returning the principal at maturity.

AFSL and licensed investment advice

In Australia, providing personal financial advice requires the provider to hold, or work under, an Australian Financial Services Licence (AFSL) issued by ASIC. Check a financial adviser’s licence at register.moneysmart.gov.au before consulting them.

Robo-advisers and general advice: Some platforms provide general advice (not personalised) or robo-advisory (algorithm-based investing). This is a fast-developing area — always read the Product Disclosure Statement (PDS) carefully before investing.

Tax and investing

Income from investments (dividends, savings interest, rental income) is counted as part of your personal taxable income. Capital gains when you sell an investment asset are also taxable. This is a complex area — a tax agent or an accountant who specialises in investments can help you optimise legally and report correctly.

Investing into Australia from overseas — FIRB

People who are not Australian residents and want to invest in property or some other types of assets in Australia may need to seek approval from the Foreign Investment Review Board (FIRB). The requirements vary by asset type, nationality and investment value — check firb.gov.au or consult a solicitor who specialises in foreign investment.