New Complying Investment Framework Released
On 15 May 2015, the Australian Government released the new complying investment framework for the Significant Investor Visa ('SIV') and Premium Investor Visa ('PIV') programme. It is expected that this framework will be implemented on 1 July 2015.
Significant Investor Visa
From 1 July 2015, SIV applicants will be required to invest at least $5 million over four years in complying investments, which must now include:
a) Venture Capital and Growth Private Equity Funds ('VCPE')
A mandatory investment of at least $500,000 in eligible VCPE fund(s) investing in start-up and small private companies must be made. This is expected to increase to $1 million for new applications within two years as the market responds.
Compliance will consist of a three part test:
- Proof that applicant moneys are taken upfront in a specified vehicle;
- Proof that the applicant has entered into a commitment with a VCPE fund within 12 months from the grant of the provisional visa; and
- Proof that investments in a VCPE fund have commenced within four years from the grant of the provisional visa.
b) Funds Invested in Emerging Companies
An investment of at least $1.5 million in an eligible managed fund(s) or Listed Investment Companies ('LIC's) that invest in emerging companies listed on the Australian Securities Exchange ('ASX') must also be made.
A complying fund must have the following components:
- Investment in securities of companies that have a market capitalisation of less than $500 million at the time of first purchase by the fund;
- Up to 10% of the fund's net assets may be invested in foreign exchange listed companies with a market capitalisation of less than $500 million at the time of first purchase by the fund;
- Up to 30% of the fund's net assets can be in previously held assets who's companies have grown their market capitalisation above $500 million;
- Must maintain a minimum of 20 investee companies from three months post the fund's inception date;
- No further purchase can be made to any individual asset that exceeds 10% of the fund's net assets;
- Cash is to be no more than 20% of a fund's net assets; and
- Derivatives are to be used for risk management purposes only.
c) Balancing Investment
The applicant must also make a ‘balancing investment’ of up to $3 million in managed fund(s) or LICs that invest in a combination of eligible assets that include other ASX listed companies, eligible corporate bonds or notes, annuities and real property (subject to the 10% limit on residential real estate).
Under the current framework, SIV investments were largely invested in government bonds and residential real estate funds which already attracted large capital flows. These changes will be introduced to promote investment, innovation and commercialisation of Australian ideas, research and development.
Premium Investor Visa
The PIV will be introduced on 1 July 2015 and will provide an accelerated 12 month pathway to permanent residency. It will target talented entrepreneurs and innovators with a minimum $15 million to invest.
It will be available at the invitation of the Australian Government only, with Austrade being the sole nominator of potential applicants. State and Territory governments will be able to make referrals to Austrade.
DIBP Application Fee Increases
On 1 July 2015, The Department of Immigration and Border Protection ('DIBP') will increase some of its application fees. Below are the proposed fees for some popular visa streams.
1. 50% increase for the SIV:
- Primary Applicant - The $4,675 application fee will increase to $7,010.
- Secondary Applicant aged 18 years and over - The $2,340 application fee will increase to $3,505.
- Secondary Applicant under 18 years - The $1,170 application fee will increase to $1,755.
2. Subclass 457 Temporary Work Skilled Visas:
- Primary Applicant - The $1,035 application fee will increase to $1,060.
- Secondary Applicant aged 18 years and over - The $1,035 application fee will increase to $1,060.
- Secondary Applicant under 18 years - The $260 application fee will increase to $265.
3. Subclass 186 Employer Nomination Scheme Visas:
- Primary Applicant - The $3,520 application fee will increase to $3,600.
- Secondary Applicant aged 18 years and over - The $1,760 application fee will increase to $1,800.
- Secondary Applicant under 18 years - The $880 application fee will increase to $900.