Government support, tax policies, and the environment of regulation are all factors that could influence a business’s choice of location in Australia, whether for startup or expansion.
The most business-friendly state in Australia in 2025 is South Australia, followed by Tasmania, the ACT, and the NT, according to the Business Council of Australia report. Published recently with an in-depth analysis that clarifies the benefits and drawbacks businesses encounter in every state of Australia.
South Australia: A Pro-Business Leader
In 2024, businesses overwhelmingly chose South Australia. The state’s success is due to its cooperative government programs, simplified licensing procedures, and tax policies that support business growth. Streamlining government programs to meet the demands of businesses was a key point of South Australia Premier Peter Malinauskas’s address:
“We are determined to make sure when we contemplate policy change, it is done in concert with business, rather than against them.”
The solid investment climate that has resulted from this cooperative approach is defined by:
- Lower payroll tax rates: One financial perk is that South Australia has the lowest payroll tax rates for large employers, which is very financially attractive for businesses.
- Efficient planning systems: In order to keep enterprises up to date, the state’s urban planning system makes sure that development applications are evaluated quickly.
- Streamlined licensing requirements: There are fewer red tape obstacles for entrepreneurs to overcome when they establish their businesses.
While the advantages are undeniable, businesses in South Australia’s retail and hospitality industries may be affected by some limits on trading hours. However, the state’s growth-promoting and investment-attracting strong government policies keep ticking along.
Tasmania: A Close Contender
Tasmania secured second place in the rankings thanks to its low land tax rates, unrestricted trading hours, and competitive workers’ compensation premiums. These features make Tasmania particularly appealing for small and medium-sized businesses.
The state’s unique geographic and economic landscape also provides opportunities in sectors such as agriculture and tourism. Its focus on skill development and engagement with Asian markets has further strengthened its position as a business-friendly state.
However, problems with population dynamics, such as net migrant outflows during recessions, are problematic for Tasmania. Because of this, the supply of skilled labour may fall, which might slow economic growth.
Australian Capital Territory and Northern Territory: Flexible and Supportive
The Northern Territory and the Australian Capital Territory also performed well in building business-friendly environments, as they were ranked fourth and third, respectively.
Australian Capital Territory (ACT)
The ACT’s retail trading hours are known to be quite flexible, which allows businesses greater flexibility to operate without being overly constrained. Many entrepreneurs choose the ACT because of its adaptability and the policies that support it.
Northern Territory (NT)
Easy licencing and low payroll taxes are two reasons why doing business in the Northern Territory is a good idea. In the Northern Territory, for example, only 22 licenses are required for café operators, but in states like Victoria, that number has risen to over 30.
For new and small businesses looking to cut down on red tape, the Northern Territory is a great alternative because of its simplified procedures and lower costs.
Middle-ranking States: NSW and Queensland
New South Wales (NSW)
Due to its diverse economy and massive market size, New South Wales (NSW)—ranked fifth—remains a powerhouse. The state capital, Sydney, is home to a strong startup ecosystem and a booming financial sector. Nevertheless, NSW is positioned in the middle of the pack due to regulatory hurdles and higher costs.
Queensland
With a robust economy driven by key sectors like healthcare and tourism, sixth-place Queensland is taking advantage of its strong position. Still, when compared with the most favourable states, Queensland’s regulatory environment has some room for improvement.
Low-ranking States: Western Australia and Victoria
Western Australia (WA)
Ranked seventh, Western Australia has a reputation for excellence in the mining industry but struggles with other states when it comes to regulatory rules. There is a growing tech startup culture and other efforts to diversify the state’s economy, but businesses nevertheless face obstacles in the form of the state’s regulatory environment.
Victoria
Unfortunately, the Business Council’s 2024 assessment placed Victoria in the last. An increasingly challenging environment for entrepreneurs has emerged, caused by high property taxes, complicated licensing processes, and increasing business expenses.
Many businesses are still cautious about expanding into Victoria, even though the state government claims record-high levels of business investment and economic development.
Regulation Rumble Leaderboard 2024
The full rankings of the best states to do business in Australia are as follows:
- South Australia
- Tasmania
- Australian Capital Territory
- Northern Territory
- New South Wales
- Queensland
- Western Australia
- Victoria
Choosing the Right State for Your Business
It is essential for businesses looking to set up or expand their operations in Australia to know the ins and outs of each state. South Australia and Tasmania have the most flexible conditions, while states like the Australian Capital Territory and the Northern Territory allow greater autonomy and offer greater value.
Entrepreneurs need to carefully assess aspects, including government support, licensing requirements, and tax regulations, to find the best match for their particular circumstances. Businesses can use the data from the 2024 rankings to make goal-aligned decisions.
