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 registration processes where required. .
The contents of this guide do not constitute legal advice and should not be relied upon as such. You should seek independent legal advice.
Refers to the Foreign Acquisitions and Takeovers Act 1975.
Agricultural land is defined in section 4 of the Foreign Acquisitions and Takeovers Act 1975 as land in Australia that is used, or that could reasonably be used, for a primary production business. This includes land which is partially used for a primary production business, or land where only part of the land could reasonably be used for a primary production business.
Asset includes an interest in an asset.
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 person
- 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).
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 are not limited to:
- vacant land with any type of government zoning
- land with a dwelling or structure developed on it.
Business interest includes interests in securities or assets, or taking other actions in relation to corporations, unit trusts and businesses that have a connection to Australia.
Commercial land is defined in section 4 of the Foreign Acquisitions and Takeovers Act 1975 (the Act) as land in Australia (including any building on the land) or the seabed of the offshore area, other than land either:
- used wholly and exclusively for a primary production business (otherwise it is likely to be considered agricultural land)
- on which the number of dwellings, other than commercial residential premises, that could reasonably be built is less than 10 (otherwise it is likely to be considered residential land)
- on which there is at least one dwelling, except a commercial residential premise (otherwise it is likely to be considered residential land).
Commercial land is then further defined as either vacant commercial land or developed commercial land:
- Commercial land is vacant if there is no substantive permanent building on the land that can be lawfully occupied by persons, goods or livestock.
- Developed commercial land is commercial land that does not meet the definition of vacant commercial land (sometimes also referred to as non-vacant commercial land). Whether land is considered vacant or developed may depend on the particular facts of the matter, as assessed on a case-by-case basis.
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 5 years. This includes any options to extend or renew the contract.
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 4 years, with the ability to extend the lease for another 6 years. Gemstone Exploration Ltd must notify us of the contractual water right.End of example
Note: 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. See Irrigation right.
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
A person holds 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. This percentage is at least 10% in the entity or business, or 5% in the entity or business where a person has entered into a legal arrangement relating to the businesses of the person and the entity or business.
For more information, see Substantial interest.
Established residential land
Residential land that is not vacant residential land or new (or near new) dwellings.
Exemption certificates are intended to reduce regulatory burden for foreign persons (including foreign government investors) by enabling them to obtain up-front approval for a program of lower-risk investments over a period of time, rather than having to apply for a no objection notification for each proposed investment.
Foreign persons may apply for approval to purchase Australian land through an exemption certificate, when an exact title of land has not yet been identified.
Section 5 of the Regulation provides that an exploration tenement means a right under a law of the Commonwealth, a state or a territory to recover minerals (such as coal or ore), oil or gas in Australia or from the seabed or subsoil of the offshore area for the purposes of prospecting or exploring for minerals, oil or gas.
It also includes a right that preserves such a right, a lease under which the lessee has such a right or an interest in such a right or an interest under such a lease. This would include, for example, a prospecting or an exploration licence.
Foreign government investor
The definition of foreign government investor is quite broad in its capture and includes state-owned enterprises and sovereign wealth funds. Investors with an actual or perceived relationship to a government or government-related entity should carefully determine their status.
See section 17 of the Foreign Acquisitions and Takeovers Regulation 2015 for further details. Some exemptions apply, which are set out in the Regulation.
See the meaning of 'foreign government' and 'separate government entity' in section 4 of the Foreign Acquisitions and Takeovers Act 1975.
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 2 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 2 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.
Example: 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: 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
GL / Gigalitre
A metric unit of capacity equivalent to 1 billion litres (equivalent to 1,000 megalitres (ML)).
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.
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.
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 it:
- meets the definition of a foreign person
- holds water entitlements (or portions of entitlements) that are not subject to irrigation rights
- holds water entitlements (or portions of entitlements) that are not used for conveyance purposes.
Under section 4 of the Water Act 2007External Link this means a right that:
- a person has against an irrigation infrastructure operator to receive water
- is not a water access right or a water delivery right.
Note: 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. See Contractual water right.
Generally, a joint tenant is 2 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.
Mining and production tenement
A mining or production tenement is defined in section 4 of the Act as either:
- a right (however described) under a law of the Commonwealth, a state or a territory to recover minerals (such as coal or ore), oil or gas in Australia or from the seabed or subsoil of the offshore area, other than a right to recover minerals, oil or gas for the purposes of prospecting or exploring for minerals, oil or gas
- a right preserving a right as defined above
- a lease under which the lessee has a right mentioned above
- an interest in a right or lease mentioned above.
ML / Megalitre
A metric unit of capacity equal to one million litres.
A security interest arising from a mortgage over real property.
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).
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 has applied for approval to purchase relevant Australian assets. This notification will grant the foreign person permission to purchase an interest in that Australian asset.
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, and
- 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.
- 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.
The Foreign InvestmentExternal Link website provides a definition in their guidance on residential land.
See the definition of vacant residential land.
Under section 5A of the Register of Foreign Ownership of Water or Agricultural Land Act 2015 a registrable water entitlement is:
- an irrigation right – which is a right a person has against an irrigation infrastructure operator (IIO) to receive water (and excludes a water access right or a water delivery right)
- a right (including an Australian water access entitlement) conferred by or under a law of a state or territory to do either or both of the following
- to hold water from a water resource in Australia
- to take water from a water resource in Australia.
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: 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: 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 10-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
The Act defines this as either a:
- Registerable water entitlement
- A contractual water right of a person
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.
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.
Under section 4 of the Water Act 2007, to 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
Tenants in common are 2 or more people who separately own a percentage of a property. The percentages may be unequal. Tenants in common can dispose of or bequeath their share of the property to anyone. When a tenant in common dies, their share in the property does not pass to the other tenants in common and becomes an asset of their deceased estate. There is no right of survivorship.
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.
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 definition of Australian land.
A variation can be sought to make changes to an existing 'No objection notification' or exemption certificate.
The types of variations that can occur are:
- revoking a condition
- imposing a new condition
- varying an existing condition
- varying certain information provided in the no objection notification.
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.
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:
A right to have water delivered by an infrastructure operator.
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 Foreign Acquisitions and Takeovers Act 1975.
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 occurs.
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 Registration of registrable water for more information.
Example: 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: 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