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  • Foreign Investment Reforms working group minutes 6 March 2018

    The Foreign Investment Reforms Working Group meeting was held on 6 March 2018.

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

    Vacancy Fee

    • In the 2017–18 Budget the vacancy fee measure was announced as part of a comprehensive housing affordability plan. The measure is designed to discourage foreign investors from buying residential properties and leaving them vacant. The legislation took effect from 15 December 2017.
    • The vacancy fee measure applies to foreign persons who make a foreign investment application for residential property from 7.30pm (AEST) 9 May 2017 and to foreign persons who are purchasing in a development that has a New Dwelling Exemption Certificate which was applied for after 7.30pm (AEST) on 9 May 2017. FIRB applications prior to 9 May 2017 are out of the scope of this measure.
    • Foreign investors will have to lodge a vacancy fee return and pay a fee if required to do so. The use of the dwelling has to satisfy the requirement of being residentially occupied. The vacancy fee will generally be equivalent to the investor’s foreign investment application fee.
    • An ATO online form will be available where the foreign person will be required to make a declaration regarding their use of their property. Foreign investors will be required to lodge regardless of whether the property has been left vacant.

    Registers of foreign ownership

    • Residential land register:
      • the ATO is establishing the Register of Foreign Ownership of Residential land. There is no stocktake period for this register and there is also no law underpinning it. The register is being populated using data matching and self-registrations.
    • Water entitlements register:
      • the stocktake period for the Register of Foreign Ownership of Water commenced on 1 July 2017 and closed on 30 November 2017. The ATO is working with Treasury, the Department of Agriculture and Water Resources and relevant intermediaries to ensure foreign investors are aware of their reporting requirements.
      • a report is being produced for Government on the statistics about the register.
    • Agricultural land register:
      • the second annual report on the Foreign Ownership of Agricultural Land Register was released by the Treasurer on 29 September 2017. The proportion of agricultural land with a level of foreign ownership has fallen from 14.1% (adjusted) at 30 June 2016 to 13.6% at 30 June 2017. The top two foreign investors by country are the UK with 2.6% and China with 2.5% of total agricultural land in Australia.
      • the third report will be released later this year.

    Residential real estate and commercial non-sensitive – screening and compliance

    • We continue to screen residential and non-sensitive commercial foreign investment applications, collect application fees and undertake investigations to ensure foreign investors who have purchased residential property are meeting their obligations.
    • The statistics for the 2016/17 year are not yet public and will be made available in the FIRB annual report being drafted by Treasury.
    • Disposals figures in the public domain have been provided in media releases and doorstop interviews. Outcomes from investigations include formal disposal orders issued in respect of more than 73 foreign owned properties worth more than $134 million. In addition, the Treasurer has also announced 36 properties that have been self-disposed as a direct result of compliance investigations.

    Treasury update

    • Two media releases were published on 1 February 2018:
      • Australian opportunities test – ensures Australians have the opportunity to purchase agricultural land. Foreign investors need to demonstrate that land was marketed to Australian bidders for at least 30 days.
      • New conditions on the sale of Australian electricity – future applications will attract ownership restrictions or conditions for foreign buyers. Each case will be determined on a case by case basis.
    • Treasury is enhancing its compliance arrangements for foreign investment. These arrangements are designed to provide strengthened assurance that foreign investors are meeting their obligations while minimising the regulatory burden.
      Last modified: 10 Jan 2019QC 57738