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  • Foreign Investment Stakeholder Group key messages 18 March 2020

    Group restructure and purpose

    Keir Cornish, Internationals Foreign Investment Program, ATO

    The ATO Consultation arrangements are organised into stewardship groups, stakeholder relationship groups and special purpose working groups. From January  2020, the Foreign investment reforms working group transitioned from a Special purpose working group to a Stakeholder relationship group. It was set up as a special purpose working group to consult specifically on the implementation of foreign investment reforms announced in 2015 and 2017. The function of that group has now dissolved as consultation has been completed in regards to those reforms.

    The purpose of the Foreign Investment Stakeholder Group is to maintain and harness relationships with key stakeholders and provide the opportunity for business and industry to give feedback, opinions and ideas on the Foreign Investment Program of work being undertaken by the ATO. An information kit will be issued to each member of the group outlining the ATO’s consultation framework, protocol and principles and expectations of members.

    Regulatory Performance Framework

    Simone Abbot, Foreign Investment Division, Treasury

    • In 2014, the Australian Government established the Regulator Performance Framework (RPF) to encourage Commonwealth regulators to undertake their functions with the minimum impact necessary to achieve regulatory objectives and to effect positive ongoing and lasting cultural change within regulators.
    • The Treasury released the fourth annual report of the Regulator Performance Framework Report External Linkfor 2018–19 in regards to the Administration of the Australia’s Foreign Investment Framework on 28 February 2020. Under the RPF, regulators must undertake an annual self-assessment of their performance using six key outcomes-based performance indicators (KPIs). An overview of the mechanics of the report, key performance indicators and focus areas for 2019–20 were discussed. The focus areas include, among other things, enhancing avenues for formal and informal engagement, including stakeholder feedback, and increasing survey response rates.

    Register of Foreign Ownership of Land and Water Reports update

    Jennifer Farley, Internationals Foreign Investment Program, ATO

    • Three reports from the Registers of Foreign Ownership are being progressed. The ATO is liaising closely with Treasury on the timing of release on firb.gov.auExternal Link. This includes:
      • The inaugural Residential Land Register report - Insights into Foreign Purchases and Sales of Residential Real Estate Report.
      • The fourth Report on Foreign Ownership of Agricultural Land 2018–19
      • The second Report on Foreign Ownership of Water Entitlements 2018–19 is in final consultation stages with the Department of Agriculture, Water & Environment and Treasury.
       
    • Following the release of the reports, the ATO will undertake an email communication to all active registrants on the Registers of Foreign ownership of Agricultural land and separately Water entitlements as at 30 June 2019. The email communication will remind foreign persons that part of their obligations includes updating their Registration if they are no longer a foreign person or their ownership of their property has changed

    This will become an annual process which will add to the client experience and ensure integrity of the currency of the data by adding another control to ensure compliance with details are kept up to date.

    Senate Enquiry into foreign investment

    John Breusch, Foreign Investment Division, Treasury

    • Treasury is finalising a submission to the Senate Economics References Committee’s inquiry into foreign investment proposals. The inquiry is looking at foreign investment framework (including the use of conditions) broadly and, more specifically, the links between foreign investment and market manipulation, market concentration and money laundering.
    • Separately, the Joint Standing Committee on Trade and Investment Growth is conducting an inquiry into diversifying Australia’s trade and investment profile. Submissions are due on 9 April.

    Near new dwelling legislation changes

    Libby Haydon, Internationals Foreign Investment Program, ATO

    • Two bills to impose fees on developers holding Near-New Dwelling Certificates have been passed by Parliament receiving Royal assent in December 2019. This includes Foreign Acquisitions and Takeovers Fees Imposition Amendment (Near new Dwelling Interests) Act. 126 of 2019 and the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Act. 129 of 2019.
    • To help clients impacted by the new legislation comply with their obligations, identified clients with an immediate impact were advised prior to the legislative enactment and we are continuing to work with those clients to collect fees.

    Prompter campaigns - Residential developments (Vacant land and established redevelopments)

    Jennifer Farley, Internationals Foreign Investment Program, ATO

    • In early April 2020, approximately 2,900 emails will issue to foreign investors holding vacant land or established dwelling for redevelopment approvals to remind them their four years to complete construction condition is approaching.
    • Foreign investors who are on track to complete construction do not need to do anything further; however those who may need to seek a variation to their conditions are invited to seek an extension of the timeframe.

    Foreign investment implications for Family law settlements

    Jennifer Farley, Internationals Foreign Investment Program, ATO

    There has been a noticeable increase in enquiries from intermediaries in relation to the devolution of law exemption provided for at section 29 of the Foreign Acquisitions and Takeovers Regulations (FATR). This exemption excludes persons transferring property by will or devolution of law from being treated as a ‘foreign person’ under the Act.

    The key element that is required for the devolution of law exemption to apply is a lack of voluntariness of the party or parties. The only circumstance in which an acquisition of an interest in a residential property would be exempt under section 29 FATR, would be final orders made by the presiding judge at the conclusion of family law property proceedings.

      Last modified: 23 Apr 2020QC 62294