7 Dec 2015

New Australian foreign investment rules came into force on 1 December 2015 following the passage of the Government’s Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. These included new application fees, greater compliance powers to the Australian Taxation Office (“ATO”) and increased penalties for non-compliance.

APPLICATION FEES
Applicants must pay the fee before their foreign investment application is processed. If an application falls into a number of categories, the category with the highest fee would apply.
Residential Real Estate
Generally, non-resident foreign persons are prohibited from purchasing established dwellings in Australia. Temporary residents can apply to purchase one established dwelling to use as their residence while they live in Australia, which must be sold if the property ceases to be their principle place of residence.
The following application fees apply:
Property valued $1 million or less – $5,000
Property valued over $1 million – $10,000 then $10,000 incremental fee increase per additional $1 million in property value.
Property Developers of Residential Real Estate
Property developers can apply for new dwelling exemption certificates to sell new dwellings in a development of 50 or more residences to foreign investors. However, if a single foreign investor wants to purchase more than $3 million worth of apartments in any one development then they will have to seek individual approval. Additionally, developers will be required to market dwellings in Australia as well as overseas.
Property developers will pay an upfront application fee of $25,000 with a reconciliation of properties sold to foreign persons based on above residential rates.
Commercial Real Estate
The threshold for office, industrial and commercial accommodation requiring prior approval has been increased from $55 million to $252 million (pegged to CPI) or $1,094 million for foreign investors from the United States, New Zealand, Chile, Korea, Japan and soon China.
The following application fees apply:
Vacant commercial land – $10,000
Commercial real estate – $25,000
Agriculture
A new agricultural land foreign ownership register has been established, and the screening threshold for proposed foreign purchases of agricultural land by private investors was lowered from 252 million to $15 million.
Additionally, direct investments in agribusiness over $55 million will generally be screened by the Foreign Investment Review Board. The threshold may vary depending on where the non-government investors are from.
ATO

From 1 December 2015 the ATO will:
1. process applications received from foreign persons proposing to invest in Australian residential land. Applications for purchases of non-residential land will continue to be processed by the Treasury;
2. be responsible for the Agricultural Land Register; and
3. collect all fees in relation to all foreign investment applications.

NEW PENALTIES
A new regime of civil penalties will be introduced and the existing criminal penalty regime will be expanded. The maximum criminal penalties will be increased to $135,000 or 3 years’ imprisonment, or both for individuals; and up to $675,000 for companies.
New civil penalties have been introduced with the maximum penalties being dependent on the type of breach. These penalties potentially extend to third parties who knowingly assist foreign investors to break the rules. Under the new arrangement foreign investors who fail to comply with the rules will not be able to profit from doing so including forfeiting any capital gains made on divestment of a property.
The above article is for general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

*This is general information only, and does not constitute specific legal advice. Please consult one of our experienced Legal Team for specific advice relevant to your situation.

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