One of the most significant reforms to foreign investment regulation in Australia is the introduction of a user-pays model on all foreign investment applications and exemption certificates.
Application fees for residential and commercial acquisitions, exemption certificates, compulsory notifications and advanced off the plan certificates commence at $5,000 (and increases based on the consideration of the acquisition or type of exemption).
There is no upper limit to the fee the Treasurer may impose for acquisitions of residential land over $1 million. For all purchases over $1 million, the fee is calculated at $10,000 per million (example: the fee to assess a $10 million property will be $100,000).
Fees will also be imposed on the assessment of business investments by foreign investors. A business investment includes acquisition of shares and any type of arrangement which results in the change in control of an Australian business or corporation. Costs of assessing such applications and commercial transactions are $ 25,000 for all acquisitions and transactions under $ 1 billion, rising to $100,000 for deals over $1 billion.
The modernisation of the foreign investment framework will also include:
- introduction of stricter penalties;
- increase in compliance activity and enforcement functions through new oversight by the Australian Taxation Office;
- reforms to investment in agricultural property;
- introduction of a comprehensive land register of all real estate owned by foreign investors; and
- modernisation of the foreign investment legislative framework to streamline assessments and to reduce complexity.
The new reforms represent the most significant shift to foreign investment regulation in Australia in over 40 years. We will provide a more in-depth examination of the reforms in our next Foreign Investment Alert.