Strengthening Australia’s Foreign Investment Framework
In February 2015, the government announced that the ATO will take responsibility for both approving foreign investment in residential real estate and a new register of foreign investment in agricultural land.
On 2 May 2015, the government provided further details of the new functions the ATO will be given as part of the initiative to Strengthen Australia's Foreign Investment Framework. These included:
- The ATO will immediately commence compliance activities to ensure foreign investors who have invested in Australian residential property are meeting their obligations under the Foreign Acquisition and Takeover Act 1975 (FATA).
- For investors who voluntarily inform the ATO that they have breached the rules about investing in residential property there was a reduced penalty period (2 May 2015 to 30 November 2015). This excluded those involved in current ATO/FIRB investigations and those involved in serious crime.
- From 1 July 2015, the ATO will be responsible for the Land Register.
- From 1 December 2015, the ATO will be responsible for the collection of fees in relation to all foreign investment applications.
- From 1 December 2015, the ATO will be responsible for administering all aspects of the FATA in relation to residential real estate (including the screening of applications).
- From 1 July 2016, the ATO will also be responsible for a register related to foreign ownership of residential real estate.
When did the changes become law?
The originating Bills (Foreign Acquisition and Takeovers Legislation Amendment Bill 2015External Link, Register of Foreign Ownership of Agricultural Land Bill 2015External Link and Foreign Acquisitions and Takeovers Fees Imposition Bill 2015External Link) received Royal Assent on 25 November 2015 and the changes to the law will commence on 1 December 2015.
What does this mean?
From 1 December 2015 the ATO:
- will process applications received from foreign persons proposing to invest in Australian residential land
- will be responsible for the Land Register
- will collect fees in relation to all foreign investment applications (not just residential real estate).
Australian residential land
From 1 December 2015 the changes to the law mean:
- Foreign persons must still applyExternal Link for approval prior to purchasing Australian residential land.
- Applications for approval to purchase Australian residential land will be processed by the ATO (other approvals will still be processed by Treasury).
- Fees will be charged by the ATO for residential land applications and for notices and orders issued under the Foreign Acquisitions and Takeovers Act 1975.
- A new penalty regime will commence. The previous criminal penalties and divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches of the residential real estate rules. The previous criminal penalties will be increased.
- Third parties who knowingly assist a foreign investor to breach the rules will be subject to civil and criminal penalties.
- Advanced off the plan certificates will still be available although the value of a dwelling/s that can be bought by a single foreign investor in a development will be limited to $3 million (investors who wish to purchase dwellings above this value will require individual approval).
- Developers will be required to market dwellings in Australia as well as overseas and if they do not they will be subject to civil and criminal penalties.
- The ATO will use its data-matching systems to identify possible breaches to ensure that the rules are enforced.
Agricultural Land Register
The establishment of the Agricultural Land Register will strengthen reporting requirements and provide a clear picture of foreign investment in Australia's agricultural sector.
A foreign person who holds agricultural land on or after 1 July 2015 must register their holding with the ATO on the Land Register (even if they are not required to apply for approval to purchase the agricultural land).
A foreign person must register their holdings within a certain timeframe. The timeframes are as follows:
- A foreign person who held agricultural land on 1 July 2015 must register with the ATO by 31 December 2015.
- A foreign person who starts to hold agricultural land after 1 July 2015 but before 1 December 2015 must register with the ATO by the 31 December 2015.
- A foreign person who starts to hold agricultural land on or after 1 December 2015 must register with the ATO before the end of 30 days after the occurrence of the event.
The ATO will undertake compliance activities to ensure that the rules are enforced and penalties may apply if you fail to register by the required date. Penalties may be imposed from 31 December 2015.
Penalties are imposed under the Taxation Administration Act 1953 and may be imposed for failing to lodge a document on time and for making a false or misleading statement.
Legislation and supporting material
Foreign Acquisitions and Takeovers Act 1975
Foreign Acquisitions and Takeovers Fees Imposition Act 2015External Link
Register of Foreign Ownership of Agricultural Land Act 2015External Link
Find out more
Foreign Investment Review BoardExternal Link website.
Australia's Foreign Investment Policy.
Joint Media releaseExternal Link issued on 11 February 2015 by the Prime Minister, the Treasurer, and Minister for Agriculture.
Joint Media releaseExternal Link issued on 25 February 2015 by the Prime Minister and the Treasurer.
Joint Media releaseExternal Link issued on 2 May 2015 by the Prime Minister and the Treasurer.
Government announcement of new foreign investment functions for the ATO