Foreign Investment Stakeholder Group key messages 3 December 2020

Foreign investment policy reform update

John Breusch, Foreign Investment Division, Treasury

Legislation in Parliament would give effect to the most significant reforms to the Foreign Acquisitions and Takeovers Act 1975 in nearly 50 years.

The reforms, which will commence on 1 January 2021, ensure that our foreign investment framework keeps pace with emerging risks and global developments, including similar changes to foreign investment regimes in comparable countries.

The new provisions will strengthen Australia’s foreign investment regime and ensure we continue to realise the benefits of foreign investment. It will require foreign investors to:

• Seek approval for all investments in sensitive national security land or businesses (including starting such a business), regardless of value.
• Be subject to enhanced monitoring and investigation powers, as well as stronger and more flexible enforcement options and penalties.
• Continue to bear the costs of administering the foreign investment regime, under a reformed fee framework that will be fairer and simpler for foreign investors.

With effect from 1 January 2021, the current temporary $0 monetary screening thresholds that were introduced in response to the Coronavirus will be removed. However, mandatory screening of investments in sensitive national security businesses will continue at the current $0 monetary threshold.

Australia will continue to welcome foreign investment for the significant benefits it provides but also ensure that investments are not contrary to the national interest.

Preparations for the new foreign investment reforms

Kerstin Wijeyewardene and Simone Abbot, Foreign Investment Division, Treasury

Treasury’s Foreign Investment Division office will be closed from noon (AEDT), Thursday 24 December 2020 until opening of business on Monday 4 January 2021. During this shutdown period Treasury will not be processing applications, answering calls on the FIRB phone line or monitoring publicly available inboxes (including firbenquiries@treasury.gov.au and firbapplications@treasury.gov.au).

New guidance notes to support the foreign investment reforms will be available on firb.gov.auExternal Link in the week of 21 December 2020.

During the office shutdown period, the FIRB website will remain online to allow access to the new guidance notes. A broader refresh of content on the FIRB website will take place on Tuesday 5 January 2021.

As previously announcedExternal Link, the FIRB Portal will remain open until 11:55pm (AEDT) on Thursday 31 December 2020. The FIRB Portal will then be subject to an outage and will be unavailable until the opening of business on 5 January 2021. During this outage, applicants who access the FIRB Portal will receive a notice saying that the FIRB Portal is unavailable and notifying how urgent applications can be submitted. Any applications submitted in this period will be considered from Monday 4 January 2021.

Register reports update

Jennifer Farley, Internationals Foreign Investment Program, ATO

Insights reports on the Register of Foreign Ownership of Residential Land

The first two Insights reports on the Register of Foreign Ownership of Residential Land were published on 9 October 2020 and are now available on the FIRB website.

Insights into foreign purchases and sales of residential real estate 2017–18External Link

Insights into foreign purchases and sales of residential real estate 2018–19External Link

The Register was established as part of the Australian Government's commitment to provide greater transparency about levels of foreign investment in residential real estate in Australia. The Register dataset is one of the outcomes of the 2015 foreign investment reforms. In 2015–16 the Australian government funded states and territories to add foreign investment identity fields to their land titles data. This change required states to implement legislation, and 2017–18 is the first year for which datasets have been able to be utilised for a report at the national level. The first two reports are based on information extracted from the Register which about purchase or sale transactions during 2017–18 and 2018–19 by foreign persons.

Register of foreign ownership of agricultural land – Report of registrations as at 30 June 2020.

The Register of foreign ownership of agricultural land - Report of registrations as at 30 June 2020External Link was published on 11 December 2020.

Register of foreign ownership of water entitlements – Report of registrations as at 30 June 2020

The preparation of the Report of registrations of water entitlements as at 30 June 2020 is continuing to progress and will be published in the new year.

Compliance update

Mary Jeffries, Foreign Investment Division, Treasury

Treasury adopts a risk-based approach to its compliance efforts and is focused on areas of risk to the national interest. An overview of compliance activities was provided that covers compliance assurance (audit and investigation), enforcement, stakeholder engagement and market intelligence. Treasury has recently focused on developing the work program that will support implementation of the compliance and enforcement aspects of the foreign investment reforms.

Bernie Sabine, Internationals Foreign Investment Program, ATO

Register of foreign ownership of Agricultural land compliance strategy

Under legislation, foreign persons who purchase Australian agricultural land are required to register their interest on the Register of Foreign Ownership of Agricultural Land and notify the ATO if their situation changes. A compliance strategy to treat non-compliance with registration obligations has been developed and this work will commence in 2021.

Register of foreign ownership of Agricultural land audit of data holdings

An audit process of data holdings within the register will be undertaken during 2021. The audit will assess the integrity of registrations and addresses the risk of whether Register entries are complete and up to date.

Residential Real Estate

Libby Haydon, Internationals Foreign Investment Program, ATO

Residential Exemption Certificates:

Residential Exemption Certificates are now available for those purchasers who have entered into a conditional contract, are valid for 12 months and provide greater flexibility to foreign purchases avoiding in many cases a requirement for a variation or new application for unsuccessful purchase attempts.

The ATO has published a new webpage Exemption certificates for foreign investors of residential real estate and a communication strategy to promote exemption certificates will be undertaken in the 2021 year.

Vacancy fee:

The vacancy fee compliance strategy incorporates an email reminder approach prior to the vacancy fee lodgment due date, and at several intervals to follow up on clients who fail to lodge on time. SMS reminders are staged within a week of reminders being sent. Clients must lodge the vacancy fee return if the dwelling has been occupied. Due to the COVID-19 pandemic, compliance work associated with deeming clients with the vacancy fee for failing to lodge was halted. This work has re-commenced from late November 2020.

In 2021 a vacancy fee webinar will be developed as an educational initiative to further promote compliance. A communication strategy is being developed to promote the webinar. Letter and other communications materials are also being reviewed.

Any feedback/ideas on how to further encourage foreign investor clients to engage more and encourage on time lodging can be directed to FIRBATOcomms@ato.gov.au