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  • Penalties for breaching foreign investment rules

    Foreign investors in Australia’s property market should be aware of tax rules or risk big fines.

    In a recent case, one investor attracted $250,000 in penalties for buying multiple properties in Melbourne without receiving permission from the Foreign Investment Review Board.

    The Australian Taxation Office (ATO) identified the purchases using multiple data sources. This was part of a multi-faceted compliance approach to detect foreign investors in breach of the Foreign Acquisitions and Takeover Act 1975 (FATA).

    In July 2020, the ATO filed proceedings in relation to six breaches of the FATA against Mr Vijay Balasubramaniyan. Mr Balasubramaniyan had bought four properties without permission, in contravention of the FATA.

    'We welcome this decision as it is the first penalty decision under the FATA. This serves as a clear deterrent to other foreign investors who believe they can operate outside of the law' ATO Assistant Commissioner Keir Cornish said.

    'We promote voluntary compliance, but if investors aren’t aware or flout the rules, enforcement action is taken.'

    Foreign investors are limited in the type of residential property they can buy in Australia and must apply before doing so. Breaching the FATA can lead to civil penalties, enabling the government to recapture the capital gain or 25% of the property value, whichever is greater.

    You can anonymously report a breach of the foreign investment real estate rules by completing a tip-off form on our website or by calling 1800 050 377. Lower penalties may apply for foreign persons who self-disclose a breach of the rules.

    More information

    Last modified: 17 May 2022QC 69611