There have been a number of recent developments which will impact the application and enforcement of Australia’s regulation of foreign investment in rural land, agribusinesses and residential properties. You should expect closer scrutiny of investments in these sectors.
In summary the latest developments are:
- Rural land: with effect from 1 March 2015, the threshold for prior approval of acquisitions of rural land is reduced to AUD15 million. The value of the rural land is calculated by the cumulative value of rural land owned by the applicant and its associates, including the value of the land to be acquired.
The new threshold will not affect private investors from the US, NZ, Chile, Singapore and Thailand who will continue to be governed by separate thresholds.
Agricultural land register: from 1 July 2015, there will be a national register of foreign ownership interests in agricultural land recording information on all new foreign investment regardless of value.
- Proposed reforms – Options Paper: on 25 February 2015, the Government released an Options Paper canvassing a range of possible reforms to the Foreign Acquisitions and Takeovers Act 1975 including:
- a new AUD55 million screening threshold for private investments in agribusiness
- introduction of civil penalties and infringement notices, in addition to the current criminal penalties, in particular in relation to residential property transactions
- widening accessorial liability for compliance to executives, advisers and intermediaries
- new application fees in the order of between AUD10,000 to AUD100,000 for business, commercial real estate, and agribusiness investments and a minimum fee of AUD5,000 for residential real estate.
- Increased enforcement activity: On 3 March 2015, the Treasurer ordered the forced divestiture within 90 days of a recently acquired Sydney waterfront home (purchase price over AUD35 million). Other enforcement actions are likely to follow.
The increased enforcement activity in relation to residential property – perhaps prompted by a recent Parliamentary Committee report on the area – does not, in our view, imply any general change in approach by the Government toward foreign business investments. Australia remains very open to foreign investment.