Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Jim Chalmers MP)General outline and financial impact
Outline
The amendments in the Fees Imposition Bill and the Foreign Investment Bill encourage investment which will boost Australia's housing stock, while strengthening the integrity of Australia's foreign investment rules.
Schedules 1 and 2 to the Fees Imposition Bill amend the Act and the Regulations to triple fees for acquiring established residential dwellings and double vacancy fees in the foreign investment framework. The Foreign Investment Bill clarifies that these imposts, other foreign investment fees and similar state and territory property taxes, prevail in the event of any inconsistency with double tax agreements implemented domestically by the Agreements Act.
Proposal announced
Together, the Bills implement the 'Foreign Investment – raising fees for established dwellings' measure in the 2023-24 MYEFO.
Compliance cost impact
The measures in these Bills do not have any compliance cost impact.
Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2024 – Amendments of the Act and Regulations
Schedule 1 to the Fees Imposition Bill amends the Act to update the fee cap, which is the maximum fee that can be imposed by the Regulations. Schedule 1 to the Fees Imposition Bill also amends the relevant indexation provisions that apply to the fee cap. The amendments enable the tripling of fees for acquiring established residential dwellings and the doubling of vacancy fees in the foreign investment framework. These changes were announced by the Government on 10 December 2023.
Schedule 2 to the Fees Imposition Bill amends the Regulations to triple the fees for giving notice in relation to the acquisition of established dwellings, and double the vacancy fees for established and new residential dwellings acquired on or after 7.30 pm on 9 May 2017. Schedule 2 to the Fees Imposition Bill also updates the relevant indexation provisions to be consistent with the changes to the Act in Schedule 1 to the Fees Imposition Bill.
Date of effect
The Fees Imposition Bill commences on either 1 April 2024 or the day after that Bill receives Royal Assent, whichever occurs later.
Financial impact
The Fees Imposition Bill is estimated to increase receipts by $525.0 million over the five years from 2022-23.
All figures in the table below represent amounts in $m, rounded to the nearest tenth of a million each year.
| 2023 – 24 | 2024 – 25 | 2025 – 26 | 2026 – 27 |
| 50.0 | 115.0 | 170.0 | 190.0 |
Human rights implications
The Fees Imposition Bill raises human rights issues. See the Statement of Compatibility with Human Rights — Chapter 4.
Treasury Laws Amendment (Foreign Investment) Bill 2024 – International tax agreements
The Foreign Investment Bill amends the Agreements Act to clarify any uncertainty associated with the interaction between certain taxes, such as foreign investment fees and similar state and territory property taxes, and double tax agreements implemented domestically by the Agreements Act.
The amendment ensures that such taxes prevail in the event of any inconsistency with the Agreements Act. The amendment applies retrospectively for a period of six years. This time limitation broadly aligns with statute of limitation periods under state and territory legislation.
Date of effect
The Foreign Investment Bill applies to taxes (other than income taxes and fringe benefits tax) payable on or after 1 January 2018 and taxes (other than income taxes and fringe benefits tax) payable in relation to tax periods (however described) that end on or after 1 January 2018.
Financial impact
The Foreign Investment Bill is estimated to have nil or minimal financial impact.
Human rights implications
The Foreign Investment Bill does not engage any human rights issues. See the Statement of Compatibility with Human Rights — Chapter 4.