As you may be aware, existing off-the-plan blanket pre-approval certificates currently available for developments over 100 lots will be replaced by a section 57 Exemption Certificate (Exemption Certificate) under the proposed Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 and Foreign Acquisitions and Takeovers Fee Imposition Bill 2015 (Proposed New Regime).

NEW FEES

Currently there are no application fees to the Foreign Investment Review Board (FIRB) involved with applying for an Exemption Certificate.

Under the Proposed New Regime, a developer who wishes to apply for an Exemption Certificate will need to pay the following fees:

  1. $25,000 upon application
  2. Every six months, for each lot sold to a foreign purchaser during that period, a fee of:
    • $5,000 where the purchase price for each lot sold is under $1,000,000
    • where the purchase price of each lot is over $1,000,000, the fee is increased by $10,000 for every million or part thereof.

To put this into context, based on the current Proposed New Regime, a developer who obtains an Exemption Certificate after 1 December 2015 and sells 200 lots (assuming under $1,000,000 purchase price per lot) to foreign purchasers will have to pay $1,025,000 to FIRB.

APPLY NOW TO AVOID NEW FEES

Developers who apply and obtain an Exemption Certificate prior to the commencement of the Proposed New Regime on 1 December 2015, will not have the above fees apply to their developments.

For applications made prior to the commencement of the Proposed New Regime but have not received an Exemption Certificate, the developer will not be required to pay the application fee. However, the Proposed New Regime is unclear as to whether the six-monthly fee for individual lots sold to foreign purchasers will still apply in this circumstance.

We therefore recommend that that, where possible, you make an application for an Exemption Certificate in the window before the Proposed New Regime is introduced as soon as you have received a planning permit, or immediately if you have an existing permit, even if you are seeking further amendments for that permit.

Developers should also consider in preparing their master sale documents how these fees are to be allocated if they fail to obtain an Exemption Certificate before the Proposed New Regime commences (for example, is the developer to absorb these fees in full or seek partial or full recovery from foreign purchasers?).

As FIRB has 30 days to consider an application and make a decision, we recommend you contact us immediately to apply now if the above is relevant to your development.