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  • Foreign Investment Reforms working group minutes 7 August 2018

    The Foreign Investment Reforms Working Group meeting was held on 7 August 2018.

    The information provided below is a summary of topics discussed at the meeting

    Vacancy fee

    • Since the last meeting of 6 March 2018 the ATO has implemented the system infrastructure and a framework to support the administration of the vacancy fee by developing a new vacancy fee form and web content. We have published a pre-recorded webinar on the ATOtv channel, worked with Treasury to update the Vacancy Fee Guidance Note 48 and visited 22 intermediaries who represent the largest proportion of foreign investor applicants.
    • Two live webinars are scheduled for 8 August and 5 September 2018. To promote the webinars and the Vacancy fee, we have engaged with Working group members, written to over 1,800 intermediaries, issued publications through the Tax Professionals newsletter, Business bulletin and a range of other channels through the ATO’s public relations and media teams.
    • The ATO’s approach is to help investors comply through education, prevention and support. To assist them with meeting their obligations, foreign investors are issued ‘Reminder to lodge‘ notifications before the end of their individual vacancy year, which provides them with a digital and seamless client experience. An overview of the form and the reminder system will be discussed in the live webinars and is also contained in the pre-recorded webinar on the ATOtv site.
    • Two fact sheets are being developed (in English and Chinese):
    1. Vacancy fee obligations, and
    2. How to register on the land register

    Registers of foreign ownership

    • Agricultural land register:
      • Preparation is underway to produce the 2018 draft annual report on foreign ownership of agricultural land. This will be the third annual report on the register
      • The draft report will be sent to the Treasurer for publication later this year.
       
    • Water entitlements register:
      • Preparation is underway to produce the first report on foreign ownership of water entitlements
      • The draft report will be sent to the Treasurer for publication by early 2019.
       
    • Residential land register:
      • The ATO is continuing to populate the residential land register using a combination of self-registrations and data matching. Data matching uses property data from States and Territories and matches against the FIRB application data set in the ATO
      • The ATO uses registrations on the land register to identify foreign investors who need to lodge a vacancy fee return and issue them with reminder emails – it is important that investors are registered on the land register otherwise they will not receive the targeted reminder emails but will still be required to lodge.
       

    Tax Consult checklist

    • The ATO Foreign Investment Tax Consult Team has noted an increase in FIRB applications being submitted with responses to the Tax Checklist and additional tax questions supplied. Having the information upfront means the applications are processed more quickly.
    • The ATO encourages all advisers to familiarise themselves with these question lists and provide responses as part of their application to reduce the need for any additional requests for information to be sent out throughout the ATO’s review of tax risks of a foreign investment application.

    CGT main residence exemption for foreign residents

    • On 9 May 2017 the Government announced that Australia's foreign resident capital gains tax (CGT) regime will be extended to deny foreign tax residents access to the CGT main residence exemption. This change applies from the date of announcement. Properties held prior to this date will be grandfathered until 30 June 2019.
    • The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 2) Bill 2018 was introduced to Parliament on 8 February 2018. It did not get passed during the winter sitting and is expected to be debated during the spring sitting commencing 13 August 2018.
    • If the Bill is passed without amendment, we expect to commence our communication strategy as soon as the measure receives royal assent.

    Treasury update

    • Rollout of FIMS3 and the new application portal:
      • Treasury launched a new online foreign investment application portal that went live on 2 July 2018. It offers a number of new features for applicants and advisers. Partially completed applications can be saved and later resumed and there is an enhanced calculator for fees.
      • Key users and groups were consulted during the process of designing and developing the new portal.
      • The portal will be reviewed after it has been operational for about 6 months and users are encouraged to provide feedback. A number of advisers have already provided feedback and a more comprehensive questionnaire will be sent out at a later stage.
       
    • Delay of passage of legislation for near-new dwelling exemption certification reconciliation payments:
      • The bill has been introduced to the parliament, but is currently still before the Senate. It may be considered in the spring sitting. Until the legislation is passed, NNDEC reconciliation payments cannot be accepted.
       
    • Overview of Australian opportunities test
      • The previous update provided information on announcements made on 1 February 2018 which aim to improve transparency and ensure Australians have the opportunity to purchase agricultural land holdings. The new rules mandate vendors advertise and market agricultural land to Australians first. In the past 6 months Treasury has identified additional requirements and will provide more information and publicise more widely, when more information is available.
       
      Last modified: 10 Jan 2019QC 57739