Economic Overview
From 1979 until 2015, the island held a large degree of self-government, but this was brought to an end by the Australian Government.
The changes resulted in the breaking up of the Norfolk Island Legislative Assembly, the Norfolk Island Government, and local public service. The Legislative Assembly was replaced by a regional council, constructed under Commonwealth legislation.
The labor force of Norfolk Island is divided in: agriculture (6%), industry (14%) and services (80%).
Tourism is the primary economic activity and the main driver of economic growth. Other main industries of Norfolk Island’s economy are light industry and ready mixed concrete.
The continued sustainability of the Island’s economy, owing to this dependence on tourism, however, is now in question. Norfolk Island faces serious challenges in maintaining a tourist sector large enough, and diverse enough, to cover the shortfall in its budget.
The current reliance on tourism has serious implications for the economy, since the tourism market is “volatile, unreliable and susceptible to price variation”.
Main sectors in Norfolk Island
Tourism
Tourism industry is responsible for around 41% of Norfolk Island’s revenue.
71% of all businesses on Norfolk Island are strongly associated with servicing the visitor industry and 68% of private sector employment is in the visitor industry.
But in the last few years the tourist sector has experiences numerous downturns, both in the number of tourists and in the amount of revenue generated. Since, as we said before, tourism is the main driver of Norfolk Island’s economy, the decrease in the number of tourists and in the amount of generated income brought the island to suffer from a severe economic downturn.
Agriculture
Farming and fishing are still very important aspects of island life. The agricultural sector has become self-sufficient in the production of beef, poultry and eggs.
Taxes in Norfolk Island
Residents of Norfolk Island previously did not pay Australian federal taxes. As there was no income tax the island’s legislative assembly raised money through an import duty, fuel levy, medicare levy, and 12% goods and services tax.
The introduction of income taxation in Norfolk Island came into effect on the 1st of July 2016.
If you operate a business, you will need to pay income tax on money your business earns. You must lodge a tax return each year to report your taxable income or your loss. The type of tax return you use depends on your business structure.
The Australian Taxation Office offers a range of tools and services to help make it easier for you to get your tax. There is also the Business Assistance Program, which offers tailored tax and support over a 12 month period.
GST, which is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia and also on most imports of goods, and other indirect taxes don’t apply to Norfolk Island.
However, Norfolk Island businesses may need to consider the GST implications when dealing with businesses on the Australian mainland.
Norfolk Island businesses are required to register for GST when they make supplies connected to the Australian mainland and have a GST turnover of over $75,000 in any 12-month period.
Exports of goods and services from Australia are generally GST-free.
Investing in Norfolk Islands
Top Reasons Why to Invest in Norfolk Island
1. Political Stability;
2. English Speaking country;
3. Currently has Low Taxation Regime;
4. Stable Currency (AUD);
5. Opportunity for Business Expansion;
6. Proximity to Australia and New Zealand;
7. Unique Culture and Heritage;
8. World Heritage Status;
9. High standard of Living and Education;
10.Open to Foreign Companies.