How we engage with foreign investors about their legal obligations and our compliance approach.
Foreign investment rules
Maintaining strong compliance with Australia’s foreign investment laws is a priority for the Australian Government. This will ensure that foreign investment is in line with Australia's national interest and security.
Our general information will help you understand the responsibilities that foreign persons have when investing in Australian residential assets.
For foreign investment in non-residential Australian assets see Foreign InvestmentExternal Link in Australia. You can also find information on the Treasurer's powers, compliance, and reporting requirements,
Together with the Treasury, we provide clear and easy to understand information to assist those seeking to invest in Australia and to encourage compliance with their obligations. These obligations are set out in the Foreign Acquisitions and Takeovers Act 1975 (FATA 1975) and associated legislation.
Our compliance strategy
We are committed to strengthening Australia’s foreign investment framework. We will continue to work to ensure that foreign investors meet the foreign investment rules and comply with their obligations.
Making compliance easy
We are committed to making compliance with the foreign investment rules and policy easy to understand for foreign investors, their representatives, and Australians.
We encourage voluntary compliance by:
- providing clear and easy-to-understand communication, tailored to help foreign investors
- maintaining a comprehensive website with detailed information on foreign investment in residential assets
- engaging with intermediaries, agents and industry bodies to provide education on changes in foreign investment policy, and help them understand their ongoing obligations to foreign investors
- offering a subscription service for professional advisers and foreign investors to receive newsletters on relevant updates
- providing a customer service phone line to answer or escalate enquiries
- maintaining secure electronic communication channels
- engaging highly skilled and knowledgeable staff who are committed to educating and assisting foreign investors to identify and meet their obligations
- providing easy access to disclose a breach of the foreign investment laws, whether prior to, or during an investigation to get the best outcome for all parties
- considering whether the law will allow us to apply a lower penalty when an investor reports they have not complied with the foreign investment regime
- analysing the drivers of non-compliance to identify opportunities to improve and encourage compliance
- providing an online service for foreign investors to help them meet and manage their obligations, review and register their residential assets, make payments and engage easily with us.
We identify non-compliance:
- using data and analytics to drive early intervention and strive towards our goal of prevention rather than correction
- through information sharing with other agencies and an increasing variety of third-party providers
- by reviewing reports made by the community to identify and treat any non- compliance.
Our compliance actions
We recognise that most foreign investors are willing to do the right thing and meet their foreign investment obligations.
We acknowledge there is a small proportion that either don’t want to comply or have decided not to. Accordingly, we adopt a compliance approach that:
- is responsive to various categories of foreign investor behaviour
- seeks to influence that behaviour by encouraging and assisting voluntary compliance.
We use a compliance model which shows the range of client attitudes towards compliance, and:
- summarises the different types of support and intervention we may need to provide to collect the required revenue
- suggests how we can influence client behaviour through our response and interactions.
We share data with a wide range of organisations and government departments, including the Australian Securities and Investment Commission (ASIC), Home Affairs, AUSTRAC, local councils, and state revenue offices.
For more information about compliance and reporting requirements, see Foreign investmentExternal Link in Australia.
Our compliance tools
Using our multi-faceted and multi-channel approach, we undertake a number of compliance investigations including:
- Covert data matching and detection – we regularly undertake data matching and sharing with other agencies and organisations to detect instances of non-compliance. During this process, we will covertly monitor foreign investors and their agents.
- Reviews – we regularly undertake reviews of foreign investors affairs that occur after routine checks, information received from other sources including data matching and community tip-offs. During this process, we will use our third-party sources such as other government agencies to verify details.
- Audits – during an audit, we will use our third-party sources, such as other government agencies, to find out more details on your affairs. We may need further information and will engage foreign investors in an audit.
What to expect
In most instances, our case officers will contact you by phone or email to advise why we are conducting an investigation and explain the investigation process. They may ask you to provide additional information about your investments.
As a result of our investigations, we may:
- direct a foreign investor to take an action or actions that will result in compliance, where they were previously breaching the foreign investment rules
- issue infringement notices or penalties to foreign investors for instances of non-compliance
- issue disposal orders, requesting a foreign investor to dispose of their investments in Australian residential property
- take further action by applying to the relevant court or tribunal to enforce compliance (see Litigation – our policies).
Our first civil litigation outcome
In 2022, we welcomed the decision handed down by the Federal Court of Australia in relation to breaches of the FATA 1975.
Using sophisticated compliance data-matching systems, our investigations into tax evasion and fraud identified several concerning activities by some investors.
In this instance, an individual investor purchased 4 properties without first applying for and receiving foreign investment approval. The investor also held 2 established residential properties. These actions are considered serious breaches of the law and warranted a 'high touch' approach in treatment.
The landmark decision handed down in the Federal Court attracted penalties of $250,000. It sent a strong message to investors on the importance of understanding and complying with their foreign investment obligations.
This outcome highlights the effectiveness of our compliance measures and compliance model. Our intention is to use the full force of the law to address any malpractice that exploits or damages the integrity of the tax system.
For more information on the Federal Court outcome, see:
- ATO media release of 11 April, 2022 Residential real estate purchases by foreign investor attract $250,000 penalty
- Commissioner of Taxation v Balasubramaniyan [2022] FCA 374 (8 April 2022)External Link (austlii.edu.au).
More guidance on compliance and penalties for residential land is available, see Foreign investmentExternal Link in Australia.
Correspondence from us
You may receive correspondence by email, SMS or post about your foreign investment in Australian residential property.
The table below lists some examples of correspondence you may receive from us.
Correspondence type |
Delivery channel |
|---|---|
An approval or no-objection notification, with conditions You may receive this letter if you have been granted approval to purchase residential real estate, where you must comply with the conditions listed on the letter. |
|
A request for information letter You may receive this letter as you are subject to an investigation. You will need to provide us with the required information listed in the letter. |
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A request to take action to resolve an identified breach letter You may receive this letter as you are subject to an investigation. You should provide all the information requested as soon as practicable. |
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A finalisation of review (or audit) letter You may receive this letter as an investigation has concluded. You do not need to do anything further. |
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A prompter-type reminder to meet the conditions on your approval, such as a reminder to construct a dwelling. You may receive the letter as a result of sophisticated ATO data analytics and profiling. You must follow the directions listed on the correspondence to avoid future compliance action. |
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A reminder to lodge an application or vacancy fee return You may receive this letter as you have not made a lodgment with us. You need to follow the instructions and lodge as soon as practicable. |
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A reminder to pay a fee or infringement letter You may receive this letter as you have not paid the fee issued to you. You need to pay as soon as practicable. |
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Expected outcomes
As an outcome of our compliance actions, we expect to see:
- improved behaviours and increased voluntary compliance
- increased understanding and knowledge of foreign investment obligations
- opportunities for future compliance actions
- improvements in our processes and systems, including data quality and accuracy.
Reporting a breach of the foreign investment rules
You can confidentially report a breach of the foreign investment rules. This includes whether you suspect or know of a breach.
If you’ve breached your foreign investment obligations, contact us as soon as you can. We will prioritise your issue and help you to comply with the rules.
How we engage with foreign investors about their legal obligations and our compliance approach.