Foreign Investment Stakeholder Group key messages 25 November 2021
Updates on Foreign Acquisitions and Takeovers reforms
John Breusch – Treasury
In accordance with section 4 of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020, the Treasury is conducting an evaluation of the foreign investment reforms that commenced on 1 January 2021.
Thank you to those who provided a submission to the evaluation of the foreign investment reforms. We are now finalising the evaluation which is required to be provided to the Treasurer by 10 December.
Reforms to the Security of Critical Infrastructure Act were passed by the parliament on 22 November. They are yet to receive Royal Assent. The changes will affect the definition of a national security business under the Foreign Acquisitions and Takeovers Act (FATA). We intend to publish an update to the National Security Guidance Note soon after Royal Assent.
Compliance website update
Alison Whatson – Treasury
In recent months the compliance page of the Foreign Investment Review Board (FIRB) website has been updated to include a message from the Treasurer to emphasise the importance we place on compliance and investor obligations. The Treasurer’s message highlights 5 key statements, that:
- Maintaining strong compliance with Australia’s foreign investment legislation is a priority.
- Foreign investors should be aware of, understand and comply with their obligations.
- A risk-based, proportionate, and professional approach will be taken when assessing compliance.
- We strongly encourage you to disclose any non-compliance with your obligations.
- Failure to comply with these laws is a serious matter and may result in penalties.
Together with the website update all letters advising of a no objection or exemption certificate have drawn attention to this statement and the new powers under the Act to prevent, identify and respond to non-compliance and a fact sheet is also now being attached to this letter. The fact sheet is also available on the FIRB website.
These updates are here to help educate foreign investors and provide better awareness of Australia’s policy relating to compliance with the FATA.
Foreign Ownership of Australian Assets Register
Bernie Sabine – ATO
On 6 October 2020 in the 2020–21 Federal Budget the new Register of Foreign Ownership of Australian Assets (FOARR) was formally announced. The ATO has been asked to develop the register.
Moving to today, the ATO is currently working on detailed elements of the FOAAR design with our enabling areas – a key milestone on progress is the confirmation of the registration process with a key focus on online services.
It is envisaged that the register will be commissioned toward the end of October 2022.
Productivity Commission Inquiry into the Register of Foreign Ownership of Water entitlements
Jennifer Farley – ATO
The Productivity Commission (PC) provided its final inquiry report to Government on 19 November 2021. The release of the report is required within 25 sitting days of receipt. This follows a draft report which was published in August and is still available on Productivity Commission websiteExternal Link.
The inquiry is a statutory requirement to inquire into the costs and benefits of the Register of Foreign Ownership of Water Entitlements, 5 years after its inception.
The draft report found that there is no compelling case for major changes to the Register, and noted that it plays a small, yet useful, role and is a relatively low-cost way of providing information not otherwise available.
The draft report recommended some tweaks to the annual statistical reports and suggested States and Territories should link to the Register from their water information portals.
The ATO is already looking into ways these improvements could be made, particularly in the context of the new Register.
Agricultural Land Register Compliance
Jennifer Farley – ATO
The ATO has commenced a program of compliance work in relation to the Register of Foreign Ownership of Agricultural Land.
Foreign persons who hold agricultural land must register their interest – registration is via ato.gov.au and is required within 30 days of settlement. This requirement exists regardless of the value of the land – that is, there is a zero $ threshold for registration.
The campaign aims to encourage self-registration. We have a three-stage process that uses email, SMS and registered mail channels. The campaign recipients has been built using a range of data sources including ATO, Australian Securities and Investment Commission, Department of Home Affairs and land titles data.
Penalties for failing to register are governed by the Tax Administration Act Failure to lodge penalties.
Further information, you can search ‘Agricultural Land Register’ on ato.gov.au; or email email@example.com
Residential investment update
Libby Haydon – ATO
On review of the past 12 months, we are seeing a return to normal number of residential real estate applications. Those numbers across the portfolio are becoming static.
We are experiencing sustained trends in the Vacancy Fee work, where 90% of the population are lodging the required yearly returns with us however 10% of the population are failing to report.
Summary of key topics discussed at the Foreign Investment Stakeholder Group meeting 25 November 2021.