Foreign Minister Julie Bishop has held talks in Canberra with her Iranian counterpart on a wide range of issues, including the recent missile launch tests by Iran.
Also on the agenda were combatting the so-called Islamic State and strengthening trade ties between Australia and Iran.
It's the first visit of an Iranian foreign minister to Australia since 2002.
Dr Mohammad Javad Zarif's arrival in Australia comes as part of a more extensive visit through the region which has included stops in Thailand, Indonesia, Singapore and New Zealand.
Up for discussion with Australia's Foreign Minister was the possible deportation of failed asylum seekers back to Iran.
Meanwhile, a protest was held by some members of the Iranian-Australian community who fear for the safety of thousands of people who be returned to their homeland if the two countries reach agreement.
But Dr Zarif says it's up to Australia to determine whether asylum seekers will be repatriated.
"That would be for Australia to decide, it's within the legal rights of Australia based on its legal obligations to make that decision. People will decide whether they want to come back to Iran or whether they don't want to come back to Iran."
Labor's foreign affairs spokeswoman Tanya Plibersek says Australia needs more information about whether returned asylum seekers would be safe in Iran.
Speaking to ABC Radio Ms Plibersek says Australia needs to move cautiously on the issue.
"Well I think Australia would have to have some very strong assurances that people would be safe returning to Iran. We know that journalists continue to be prevented from doing their work, we know that people are executed for being gay, it is a country with a very poor human rights record."
Julie Bishop also raised Iran's recent missile launches during the two ministers' meeting.
Dr Mohammad Javad Zarif says the missile tests are unrelated to his country's nuclear program, which has been wound back in exchange for the easing of international sanctions.
"Since we do not have nuclear warheads and we have undertaken not to develop them, and the international community has put in place the best mechanisms that money can buy in order to make sure that we do not develop nuclear weapons, so we do not design any missiles to carry things we do not have."
Following the missile launch, the United Nations Secretary General urged Iran's government to act with moderation, caution and the good sense not to increase tensions through any hasty actions.
The United States, meanwhile, is pusing for action by UN Security Council, accusing Iran of violating a UN resolution.
Ms Bishop says Australia will follow the world body's lead in determining how to respond.
"Having raised our concerns in the manner that I did, having heard the foreign minister's explanation it is Australia's position that should the UN Security Council wish to investigate this matter then that would be the proper legal process, for it to do so."
The pair also discussed boosting trade ties and global security issues.
Combating the so-called Islamic State was also a top concern for Iran with Dr Zarif saying his country is seeking a political solution to the Syrian crisis, and a ceasefire would never include negotiations with IS.
