In March, the Insurance Clarity team reported on action taken by the Government to enforce the resale of Point Piper mansion, Villa del Mare,due to the fact that the purchase by a company associated with Chinese national Xu Jiayin was contrary to the Foreign Investment Review Board’s (the FIRB) foreign investment policy (Foreign Investment Policy). We highlighted the potential for professional advisers including accountants and solicitors (and their insurers) to get caught up in the Governments FIRB crackdown.

Subsequently Treasurer Joe Hockey and parliamentary secretary to the Treasurer Kelly O’Dwyer initiated an Australian Tax Office audit into what are believed to be widespread breaches of the FIRB’s Foreign Investment Policy. According to yesterday’s Sydney Morning Herald, the audit is looking at a network of “high risk” investment advisers with breaches expected to be clustered around individual advisers in a range of professional firms including at a top tier law firm and one of the “big four” accounting firms. 

Meanwhile, the paper also reports that when Chinese businessman, Wang Zhijun, paid $52 million for Altona (pictured), located on Sydney’s world renowned harbour, he failed to seek foreign investment approval – apparently in reliance on advice from a large law firm on the belief that use of a family trust structure would sidestep the need for FIRB approval.

News of the ATO audit will no doubt have professional advisers running to notify their professional indemnity insurers and checking policy wordings.

See the full Sydney Morning Herald article here