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Foreign Investment Stakeholder Group key messages 23 June 2022

Key topics discussed at the Foreign Investment Stakeholder Group meeting 23 June 2022.

Last updated 21 July 2022

Treasury’s digital transformation program update

The Foreign Investment Division at Treasury are undertaking a 4 year transformation aimed at modernising the way foreign investment is managed and regulated. Treasury’s transformation will deliver a suite of new capabilities including a new case management system for Treasury to manage and regulate foreign investment, a new portal for investors and agents and a new consolidated Register of Foreign Ownership of Australian Assets (hosted by the ATO).

The transformation aims to deliver benefits such as:

  • more timely decisions by prompting the collection of the right information upfront
  • a better user experience through a more user-friendly portal
  • improved transparency on the progress of submissions.

The new capabilities will be launched over 3 releases, with the first foundational release anticipated for December 2022. Releases 2 and 3, anticipated to occur across 2023–24, will enhance and advance capability thereafter.

Treasury has conducted several consultation sessions with stakeholders to procure feedback and insights.

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Introduction to the FIRB tax consultations team

The ATO is a tax consultation partner to Treasury, who provide recommendations on tax risks, high, medium, or low under the national interest test for the decision maker. The ultimate decision maker is the Treasurer.

Following receipt of an application from Treasury, who manage the foreign investment application process, the tax consultations team will review the transaction along with various internal specialised subject tax matters and determine if there is enough information to make an assessment on the level of tax risk or if additional information is required.

If additional information is required, an information request is drafted by the ATO and sent via Treasury to the applicant.

The ATO will make an assessment on the level of tax risk and may recommend that conditions be placed on the applicant if the proposed transaction proceeds. The recommended conditions may require additional information to be provided once a transaction proceeds to verify/mitigate a risk identified during the tax consult process or ask the applicant to engage with the ATO to discuss specific tax risks.

Related party financing is by far the greatest risk identified, followed by applicants triggering a taxpayer alert or triggering a treaty shopping risk.

To aid a more efficient process and to reduce the number of conditions attached to a foreign investment application, applicants are encouraged to provide as much information as possible relevant to the tax impact of the transaction during the tax consultation process. This enables the ATO to be better informed when assessing tax risks of a proposal.

Additionally, there is the New Investor Engagement Service that is available for foreign investors and provides timely tax guidance on transactions and related tax matters for eligible businesses planning significant new investments into Australia.

Residential screening update

Annual indexation of Foreign Investment Review Board (FIRB) fees is occurring on 1 July 2022 and this year has resulted in a small increase in most application fees.

The new fees will be automatically calculated from 1 July 2022 and updated in Guidance notes 10.

Banking industry insights – a foreign investment perspective

The Australian Banking Association’s (ABA) membership is comprised of 22 banks from across Australia. ABA member banks are some of Australia’s most recognisable and historic brands. They include the 4 major banks, iconic regional banks and international banks with an Australian banking licence.

ABA advocates for a strong, competitive and innovative banking industry that delivers excellent and equitable outcomes for customers.

Ongoing activity across the agricultural industry, supported by Australian banks, has provided vital stability to the wider economy during the uncertainty of the COVID-19 pandemic.

Australian agriculture will continue to play a leading role during the current recovery period and banks remain deeply invested in the success of regional customers and communities.

ABA members constitute more than 80% of the agribusiness lending market, with $77 billion outstanding at the end of February 2022. In the 12 months to February 2022, ABA members lent an average of $4.2 billion to agribusinesses monthly, a 29% increase in the average of $3.2 billion in the 12 months prior.

The number of agricultural, forestry and fishing businesses registered in Australia has been overall in decline for more than a decade. In June 2021 there was 173,131 agribusinesses, a decline from 204,503 in June 2009. However, 2021 saw a growth of 0.8% in agribusinesses, only the second period of growth after the 0.4% growth in 2017–18.

In early June, ABA released the 2022 agribusiness report. Reports created and commissioned by the ABAExternal Link are available on the ABA website.