Penalties for breaching foreign investment rules

Penalties now apply for breaching Australia’s foreign investment rules. If you deliberately avoid your obligations, you could be risking an infringement notice, criminal prosecution or civil penalty orders.

The Foreign Investment Review Board (FIRB) now has the power to impose penalties on foreign investors who avoid gaining FIRB approval for their property purchases, or breach the rules of their conditional FIRB approval.

Some circumstances that may be subject to penalties include, but aren't limited to:

  • A foreign person failing to apply for FIRB approval prior to purchasing a property
  • A foreign person failing to comply with reporting conditions
  • A temporary resident acquiring more than one established property
  • A temporary resident renting out an established property

Property developers and those working in the property industry are also at risk of both criminal and civil penalties if they knowingly sell property to foreign persons without determining if they have obtained the correct approval.


Aussie Dream Homes Pty Ltd is a real estate business which specialises in selling established Australian dwellings in highly sought after locations which are priced in the $2 million-plus price range.

Aussie Dream Homes Pty Ltd does some limited advertising of the properties in Australia via, but the primary focus of their advertising to potential purchasers is in particular overseas locations. To this end they have agents who have specialist foreign language skills and engage marketing companies in the overseas locations.

Aussie Dream Homes Pty Ltd staff and management don’t concern themselves with whether or not the buyers they introduce to vendors need, or have obtained, FIRB approval prior to purchase.

Through compliance action, it is found that 20 of the properties Aussie Dream Homes Pty Ltd has sold in the previous year have been to foreign persons who did not seek approval and were not eligible to purchase an established dwelling.

As the real estate agency had reason to suspect the purchasers were foreign persons who were required to seek FIRB approval prior to purchasing an established dwelling, it knowingly participated in the breach and may be subject to civil and potentially criminal penalties.

End of example

Additionally, third parties including professional advisors, real estate agents and conveyancers may now face consequences if they knowingly assist another person who has breached the provisions of the Foreign Acquisitions and Takeovers Act 1975.


Mr Brown, a conveyancer, finds out two days before settlement on an existing dwelling that his client, the purchaser, is a foreign person. Mr Brown contacts his client to obtain details of the client’s approval under the Act, however, the client tells Mr Brown they have not sought approval for their proposed purchase. The foreign person advises they would like to proceed with settlement.

Mr Brown proceeds with settlement, as he is confident the purchaser would have received approval had they applied for it, as the purchaser is the holder of a temporary resident visa. Failure to give notice of a notifiable action is a breach of the Act (see sections 84 and 94).

As Mr Brown may be a third party who knowingly participated in the purchase of Australian land by a foreign person in breach of the Act, he may be liable for a civil or criminal penalty.

End of example

Further information about civil and criminal penalties, and the circumstances in which penalties may apply, can be found on the Foreign Investment Review Board websiteExternal Link.

See also:

    Last modified: 09 Jun 2016QC 49323