AUSTRALIA is giving away cash grants and numerous tax breaks to lure multinationals to the continent. In an aggressive bid to promote itself as a cost-effective location for regional headquarters, both federal and state governments will waive certain taxes for financial and information technology companies. It will also streamline immigration procedures for relocating staff from October 1. Previously, the government worked with companies on an individual basis to fast-track executives through the immigration process. The federal government is willing to give multinationals upwards of A$50,000 (about HK$284,000) towards the cost of studying the feasibility of an Australian site. This amount is expected to be equally matched by the state government. Companies must commit at least $100,000 to the study. The government will spend $2 million a year on feasibility grants. The government also plans to waive taxes on dividends sourced offshore as well as on certain costs of relocating. ''The exemption from dividend withholding tax is very important because this will interest companies which want to relocate a function but also want the option of using the headquarters as a holding company,'' said Price Waterhouse partner John Waters. Other incentives include a 150 per cent deduction on research and development as well as deductions on other start-up costs. ''Starting large projects in a new location doesn't usually generate a profit. You're allowed to carry tax losses forward for the next year up to 10 years,'' said Australian trade investment commissioner Chia Yen On. The measures were announced two weeks ago and legislation is expected to go through later this month. The government has yet to divulge any specific criteria. State governments, such as New South Wales and Queensland, are also offering exemptions on state taxes. Mr Chia said Australia was promoting itself as a regional function base to act as a support to activities in Hong Kong. He cited the example of Cathay Pacific Airways. Back office operations such as accounting and finance did not need to be Hong Kong where rent costs are relatively high. But front-line customer service would remain in the territory, said Mr Chia. Cathay decided set up a regional data centre and a world telecommunications hub in Sydney in 1992. ''Cathay used one per cent of what it would need in Hong Kong in a year for its budget in Australia. In two or three years time, it can recoup its A$200 million investment just on rental expense.''