From 1 July 2015, all foreign persons and foreign government investors (foreign investors) holding an interest in agricultural land in Australia will be required to register their interest with the Australian Tax Office (ATO) irrespective of the value of that agricultural land.
Any interest in agricultural land acquired after 1 July 2015 must be registered with the ATO within 30 days. Any foreign investor who has an existing interest (that is an interest acquired before 1 July 2015) in agricultural land must notify the ATO by 31 December 2015.
Importantly, agricultural land refers to:
- land in Australia that is used, or could reasonably be used, for a primary production business; and
- a primary production business is production resulting from cultivation of land; animal husbandry/farming; horticulture; fishing; forestry; viticulture or dairy farming.
Moving forward, foreign investors will also be required to notify the ATO when they acquire and dispose of an interest in agricultural land.
In establishing this new register, the ATO will collect information in relation to the location and size of the property, the current or intended use for the property, the amount of the interest acquired and the market value of the land, in order to develop a national register which is to be publically available from 2016.
An interest in agricultural land includes buying agricultural land, obtaining or agreeing to enter into a lease or licence over agricultural land where the term, including any option periods, is likely to exceed five years, financing or profit sharing arrangements. It includes interests acquired directly or indirectly (for example acquiring a substantial interest in a corporation or trust where more than 50% of the assets of the corporate or trust comprise agricultural land).
The introduction of the Agricultural Land Register follows on from the change in the screening measures for foreign purchases of agricultural land that were implemented from 1 March this year. As reported in our earlier alert, these changes saw the screening threshold reduced from $252 million to $15 million for private sector investors.
The implementation of the Agricultural Land Register is part of a number of measures introduced by the government which are intended to increase scrutiny and strengthen reporting requirements around foreign investment. Currently, there is no legislation which regulates the penalties for failing to register an interest in agricultural land however it is expected to be introduced by 30 September 2015.