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  • Foreign investment terms and definitions

    This guide provides a list of foreign investment terms and definitions used in the Foreign Acquisitions and Takeovers Act 1975 and related legislation.

    It will help foreign investors understand their foreign investment obligations, including the water entitlement and agricultural land registration process.

    The contents of this guide do not constitute legal advice and should not be relied upon as such. You should seek independent legal advice.

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    A

    Act, the

    Refers to the Foreign Acquisitions and Takeovers Act 1975.

    Agricultural land

    Agricultural land means land in Australia that is used, or could be used, for a primary production business.

    Associate

    Section 6 of the Foreign Acquisitions and Takeovers Act 1975 defines the term 'associate'.

    The following people are associates of a person:

    • any relative of the person
    • any person with whom the person is acting, or proposes to act, in concert in relation to an action to which the Act may apply
    • any person with whom the person carries on a business in partnership (this provision is modified for limited partners
    • any entity of which the person is a senior officer
    • if the person is an entity
      • any holding entity of the entity
      • any senior officer of the entity 
       
    • any entity whose senior officers are accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:
      • the entity
      • if the person is an entity—the senior officers of the person 
       
    • an entity if the person is accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:
      • the entity
      • the senior officers of the entity 
       
    • any corporation in which the person holds a substantial interest
    • if the person is a corporation—a person who holds a substantial interest in the corporation
    • the trustee of a trust in which the person holds a substantial interest
    • if the person is the trustee of a trust—a person who holds a substantial interest in the trust
    • if the person is a foreign government, a separate government entity or a foreign government investor in relation to a foreign country (or a part of a foreign country)
      • any other person that is a foreign government in relation to that country (or any part of that country)
      • any other person that is a separate government entity in relation to that country (or any part of that country)
      • any other foreign government investor in relation to that country (or any part of that country). 
       

    A person holds a substantial interest in an entity if the person, alone or together with one or more associates, holds an interest of at least 20% in the entity. A person holds a substantial interest in a trust (including a unit trust) if the person, together with one or more associates, holds a beneficial interest in at least 20% of the income or property of the trust.

    Australian land

    Section 4 of the Foreign Acquisitions and Takeovers Act 1975 defines 'land' to include a building (including a new dwelling or an established dwelling) or part of a building and the subsoil of land. Australian land means agricultural land, commercial land, residential land or a mining or production tenement.

    Some examples are, but not limited to:

    • vacant land with any type of government zoning
    • land with a dwelling or structure developed on it.

    C

    Contractual water right

    A contractual water right is a contractual right, including a deed. It involves the right that a person or other entity holds (alone or jointly) to another person’s registrable water entitlement.

    Where a foreign person acquires a contractual water right it will only be registrable if the rights contracted will be for a period of longer than five years. This includes any options to extend or renew the contract.

    A contract between an irrigator and irrigation infrastructure operator (IIO) for the irrigator to receive water is an irrigation right. It's not a contractual water right even though a contract might be involved. The contractual water right is intended to include only those entitlements which are leased or otherwise obtained from a person. This right doesn't include an irrigation infrastructure operator, who holds that water entitlement.

    Example: When to notify us of a contractual water right

    Quartz Quarry Pty Ltd is an Australian owned company. It holds a state government-issued water access right that provides access to a maximum of 150 ML of water from an aquifer in a given period. This right meets the definition of a registrable water entitlement conferred under a state law – taking water from a water resource and meets the definition of a registrable water entitlement. However, Quartz Quarry Pty Ltd doesn't need to register this entitlement as it isn't a foreign person.

    On 15 September 2018, Quartz Quarry leases part of its entitlement to Gemstone Exploration Ltd. Gemstone Exploration holds a contractual water right and is a foreign person. The term of the lease is for an initial period of four years, with the ability to extend the lease for another six years. Gemstone Exploration Ltd must notify us of the contractual water right.

    End of example

    Conveyance water

    The volume of water that can be attributed to conveyance water is the additional water that is required to deliver water to users. This includes water lost in transit from its source to end users due to seepage, leakage, evaporation or other similar effects.

    Note that the exemption for conveyance is only available to an irrigation infrastructure operator (IIO), not to individual entitlement holders.

    Example: Conveyance water

    Dynamic Water Cooperative (DWC) is a foreign IIO providing irrigation services in New South Wales. DWC has a small number of water access entitlements, known in New South Wales as water access licences (WALs). DWC uses WAL1234, whose nominal volume is 2,500 ML, partly to account for:

    • irrigation distribution system losses (conveyance)
    • customer’s irrigation rights
    • its own trading purposes.

    At the end of the year, DWC establishes that a volume of 1,500 ML is subject to its customers’ irrigation rights. It estimates that annual conveyance losses are in the order of 750 ML. DWC is therefore required to register WAL1234, with a volume of 250 ML, with the ATO.

    End of example

    D

    Direct interest

    A person holds a direct interest in an entity (a corporation or a unit trust) or business if:

    • the person holds, alone or with one or more associates, an interest of at least 10% in the entity or business
    • the person holds, alone or with one or more associates, an interest of at least 5% in the entity or business, and the person who acquires the interest has entered into a legal arrangement relating to the businesses of the person and the entity or business
    • the person holds, alone or with one or more associates, an interest of any percentage in the entity or business, and the person who acquires the interest is in a position
      • to influence or participate in the central management and control of the entity or business (as determined by the particular facts of the matter)
      • to influence, participate in or determine the policy of the entity or business (as determined by the particular facts of the matter). 
       
    • A person holds a specified percentage (a direct interest) in a business if the value of the interest in assets held by the person, alone or together with one or more associates of the person, is that specified percentage of the value of the total assets of the business.

    For more information see a definition of substantial interest.

    F

    Foreign government investor

    Foreign government investors and foreign governments are foreign persons for the purposes of

    This means that the requirements imposed by Foreign Acquisitions and Takeovers Act 1975 apply to all foreign government investors, unless an exemption in the Foreign Acquisitions and Takeovers Regulation 2015External Link applies.

    Foreign person

    The definition of a foreign person is complex and may apply to individuals and entities in ways that are not always immediately apparent, including entities in which a foreign person need only have an interest of at least 20%.

    You should seek independent legal advice to determine if you meet the definition.

    Foreign person is defined in section 4 of the Foreign Acquisitions and Takeovers Act 1975 to mean the following:

    • an individual not ordinarily resident in Australia
    • a corporation in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest
    • a corporation in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest
    • the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest
    • the trustee of a trust in which two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest
    • a foreign government
    • any other person that meets the conditions, prescribed by the regulations.

    See the Foreign Investment Review Board's (FIRB) guidance note 2: Who is a ‘foreign person’?External Link

    Example 1: An Australian citizen residing in a foreign country

    End of example

     

    Example 1: Not an Australian citizen and not a permanent resident

    Mr Huang is a Singaporean national who owns an agricultural holding and water entitlements. As Mr Huang is not a citizen of Australia and is not a permanent resident who is ordinarily resident in Australia, he is a foreign person.

    End of example

     

    Example 2: A company incorporated in Australia and part owned by a foreign company

    The Cattle Company Pty Ltd is incorporated in Australia. It owns farmland in Australia and runs a cattle station. A foreign company owns 24% of the shares in the Cattle Company Pty Ltd. The Cattle Company Pty Ltd is a foreign person.

    End of example

    G

    GL / Gigalitre

    A metric unit of capacity equivalent to 1 billion litres (equivalent to 1,000 megalitres (ML)).

    Ground water

    Under section 4 of the Water Act 2007External Link ground water means either:

    • water occurring naturally below ground level (whether in an aquifer or otherwise)
    • water occurring at a place below ground that has been pumped, diverted or released to that place for the purpose of being stored there.

    This does not include water held in underground tanks, pipes or other works.

    I

    Interest in Australian land

    The term interest in Australian land has a broad definition. It includes freehold interests and also other interests such as leases and interests in securities in Australian land entities.

    Section 12 of the Foreign Acquisitions and Takeovers Act 1975 defines interest in Australian land to mean:

    • a legal or equitable interest in Australian land, other than
      • an interest under a lease or licence or a unit in a unit trust
      • an interest in an agreement giving a right (known as a profit à prendre) to take something off another person’s land, or to take something out of the soil of that land
      • an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian land 
       
    • an interest in a security in an entity that owns Australian land, being a security that entitles the holder to a right to occupy a dwelling of a kind known as a flat or home unit situated on the land
    • an interest as lessee or licensee in a lease or licence giving rights to occupy Australian land if the term of the lease or licence (including any extension or renewal) is reasonably likely, at the time the interest is acquired, to exceed 5 years
    • an interest in an agreement giving a right of a kind mentioned in subparagraph (a)(ii) if the term of the agreement (including any extension or renewal) is reasonably likely, at the time the interest in the agreement is acquired, to exceed 5 years
    • an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian land if the term of the agreement (including any extension or renewal) is reasonably likely, at the time the interest in the agreement is acquired, to exceed 5 years
    • an interest in a share in an Australian land corporation or agricultural land corporation
      • an interest in a unit in an Australian land trust or agricultural land trust
      • if the trustee of an Australian land trust or agricultural land trust is a corporation—an interest in a share in that corporation. 
       

    Irrigation infrastructure operators (IIO)

    Section 7(4) of the Water Act 2007External Link defines an irrigation infrastructure operator (IIO) as an entity that operates water services infrastructure for the purposes of delivering water for the primary purpose of it being used for irrigation.

    IIO requirements to register

    An IIO will only be required to register water holdings and interests if:

    • the IIO meets the definition of a foreign person
    • the IIO holds water entitlements (or portions of entitlements) that are not subject to irrigation rights
    • the IIO holds water entitlements (or portions of entitlements) that are not used for conveyance purposes.

    Irrigation right

    Under section 4 of the Water Act 2007External Link this means a right that:

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    Joint tenants

    Generally, a joint tenant is two or more persons that hold property jointly—each owns an undivided share of the whole. Should one person die, their interest would pass to the surviving co-owner or co-owners.

    M

    ML/ Megalitre

    A metric unit of capacity equal to one million litres.

    N

    Near-new dwelling

    A near-new dwelling is a dwelling that:

    • will be, is being, or has been, built on residential land
    • is part of a residential development
    • was previously sold by the developer of that development, but the transaction failed to settle
    • has not been previously occupied for more than 12 months in total.

    Section 4 of the Foreign Acquisitions and Takeovers Act 1975 defines a residential development as a development that has one or more multi-story buildings and at least 50 independent self-contained dwellings.

    A property is considered sold once a binding purchase agreement has been entered into, regardless of whether the sale is completed (or settled).

    New dwelling

    A new residential dwelling is a dwelling that:

    • will be, is being, or has been, built on residential land
    • has not been previously sold as a dwelling
    • has not been previously occupied.

    No objection notification

    A no objection notification is a form of correspondence provided to a foreign person who have applied for approval to purchase Australian land. This notification will grant the foreign person permission to purchase an interest in Australian land.

    O

    Ordinarily resident

    Section 5 of Foreign Acquisitions and Takeovers Act 1975 defines ordinarily resident as:

    An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:

    • the individual has been in Australia for 200 or more days in the 12-month period immediately preceding that time
    • at that time, the individual is in Australia and the individual’s continued presence in Australia is not subject to any limitation as to time imposed by law, or
    • the individual is not in Australia but, immediately before the individual’s most recent departure from Australia, the individual’s continued presence in Australia was not subject to any limitation as to time imposed by law.

    Without limiting paragraph (1)(b), an individual’s continued presence in Australia is subject to a limitation as to time imposed by law if the individual is an unlawful non-citizen within the meaning of the Migration Act 1958External Link.

    R

    Residential land

    Residential land:

    • means land in Australia if
      • there is at least one dwelling on the land; or
      • the number of dwellings that could reasonably be built on the land is less than the number prescribed by the regulations; and 
       
    • does not include land
      • used wholly and exclusively for a primary production business; or
      • on which the only dwellings are commercial residential premises. 
       

    See the definition for vacant residential land.

    The FIRB provides a definition in their guidance note 6: Residential LandExternal Link. More information can be found in FIRB guidance note 14: Compliance – ResidentialExternal Link.

    Registrable water entitlement

    Under section 5A of the Register of Foreign Ownership of Water or Agricultural Land Act 2015 a registrable water entitlement is:

    Exclusions

    The following types of water rights will be excluded from the definition of a ‘registrable water entitlement’:

    • stock and domestic rights, and harvestable rights used for stock and domestic purposes
    • riparian rights
    • annual water allocations
    • rights held by an IIO to the extent that either another person holds an irrigation right in relation to that right, or they are for conveyance water.

    Example 1: Registerable irrigation right

    Simone is a foreign person and holds a right to receive 6.3 ML from the Lower River Irrigating Cooperative (which is an IIO). This right is an irrigation right and must be registered with us.

    End of example

     

    Example 2: Foreign company with a registerable water entitlement

    Pyrite Exploration Corporation (PEC) is a foreign company that conducts mining operations in a remote area in the state of Queensland not covered by a water resource plan. The Queensland government issued PEC with a 5,000 ML ten-year licence.

    The licence allows PEC to take, hold and interfere with the specific groundwater resource in accordance with the licence conditions. This licence is a right conferred under a state law to hold and take water from a water resource within Australia and is a registrable water entitlement. PEC must register the water entitlement.

    End of example

    Riparian rights

    The right of the owner of the land, through whose property a natural water resource runs, to use water from the resource for use on the land, such as for drinking water or irrigation.

    S

    Substantial Interest

    A person holds a substantial interest in an entity or trust if:

    • for an entity—the person holds an interest of at least 20% in the entity
    • for a trust (including a unit trust)—the person, together with one or more associates, holds a beneficial interest in at least 20% of the income or property of the trust.

    T

    Take

    Under section 4 of the Water Act 2007, take water from a water resource means to remove water from, or to reduce the flow of water in or into, the water resource including by any of the following means:

    • pumping or siphoning water from the water resource
    • stopping, impeding or diverting the flow of water in or into the water resource
    • releasing water from the water resource if the water resource is a wetland or lake
    • permitting water to flow from the water resource if the water resource is a well or watercourse.

    It also includes storing water as part of, or in a way that is ancillary to, any of the processes or activities referred to in the dot points above.

    Tenants in common

    Generally, a tenant in common is one who holds property in common with another person or persons so each has a portion of interest in the whole property. On death, this portion of interest passes to an who then becomes a tenant in common with the surviving co-owner or co-owners.

    Temporary resident

    A temporary resident is an individual who:

    • holds a temporary visa that allows them to stay in Australia for a continuous period of 12 months or more (regardless of how long remains on the visa)
    • resides in Australia, has submitted an application for a permanent visa and holds a bridging visa that allows them to stay in Australia until their application is finalised.

    The type of visa you hold determines what property applications you can apply for. For example, if you hold a bridging visa that will not lead to a permanent resident visa, then you cannot apply for an established dwelling – unless you intend to redevelop the property.

    Timing

    See When to register

    V

    Vacant residential land

    Vacant residential land in Australia is considered vacant if:

    • it is land on which the number of dwellings that could reasonably be built is less than 10
    • the land is not being used wholly and exclusively for a primary production business.

    Land that previously had a residential dwelling built on it would not be treated as vacant residential land. This is because a new dwelling built on the land would not genuinely increase the housing stock (as a dwelling already existed before its demolition).

    See the above definition of Australian land.

    Variation

    A variation can be sought to make changes to an existing 'No objection notification'.

    The types of variations that can occur are:

    • revoking a condition
    • imposing a new condition
    • varying an existing condition
    • or varying certain information provided in the no objection notification.

    This can be sought via the 'residential application portal' and a fee will be payable at time of application. For information see the residential real estate application – instructions.

    W

    Water access entitlement

    Under section 4 of the Water Act 2007External Link this is defined as:

    A perpetual or ongoing entitlement, by or under a law of a state or territory, to exclusive access to a share of water resources of an area in the state or territory.

    Water access licence

    A type of water access entitlement.

    Water access right

    Under section 4 of the Water Act 2007External Link water access right means any right conferred by or under a law of a state to do either or both of the following:

    • hold water from a water resource
    • take water from a water resource.

    It includes the following rights:

    Water allocation

    Under section 4 of the Water Act 2007External Link this means the specific volume of water allocated to water access entitlements in a given water accounting period.

    Water delivery right

    A right to have water delivered by an infrastructure operator.

    Water entitlement

    See Registrable water entitlement.

    Water holdings and interests requiring registration

    Foreign persons will need to register their interests in a registrable water entitlement or a contractual water right. Both of these terms are defined in the Register of Foreign Ownership of Water or Agricultural Land Act 2015.

    When to register

    A foreign person will need to register their interest in a registrable water entitlement or contractual water rights with us at the time of the event or within 30 days of the end of each financial year an event occurred.

    However, if the acquisition and disposal of the same registrable water entitlement or contractual water right occurs during a single financial year, there is no need to notify us of either event.

    Similarly, if a person who holds a registrable water entitlement or contractual water right begins to meet the definition of a foreign person during a financial year but does not meet the definition by the end of the same year, the person will not be required to register.

    If you anticipate multiple transactions during the year, it is recommended that you wait until year end to register the relevant event and volume of water held.

    See water register and land and water register and instructions for more information.

    Example 1: Foreign person with registerable water entitlement

    Binny Jenkins is a foreign person who owns an asparagus farm in New South Wales and has an irrigation right with ABC Irrigation Ltd. She enters into the contract with ABC Irrigation Ltd in February 2018.

    The irrigation right meets the definition of a registrable water entitlement. Binny has until then end of July 2018 to register the irrigation right with us.

    End of example

     

    Example 2: Changes to water allocation

    Pippa Storey is a foreign person who purchases a new 10 ML water allocation in a catchment in Queensland in February 2018. Pippa already holds another water allocation for 20 ML with the same characteristics in that catchment, which has been previously registered with us.

    Pippa has until the end of July 2018 to register her new water allocation. However, before registering her new water allocation Pippa decides to amalgamate the latest water allocation with her existing holding for ease of administration and does this before 1 July 2018.

    As a result of the amalgamation, the volume against Pippa’s existing water allocation changes and she must notify us of this event.

    End of example
    Last modified: 18 Oct 2021QC 52592