In our Alert dated 18 November 2014, we noted that the Federal Government had entered into the Australia/China Free Trade Agreement and that some key changes were proposed to the way the Foreign Investment Review Board (FIRB) would deal with inbound investment. In Canberra earlier today, Prime Minister Tony Abbott reaffirmed that the Federal Government is set to announce key changes to foreign investment in the agriculture sector.
In this Alert, Senior Associates Alex Davies and Lea Fua highlight these new changes and how they will effect inbound foreign investment.
- Foreign investors in agricultural land are set to come under greater scrutiny on disclosure.
- Effective from 1 March 2015, the FIRB screening threshold for acquisitions of farmland will be dropped from $252 million to $15 million.
- A bill to give effect to this change is currently before the Federal Parliament.
- The new threshold will apply to the cumulative value of agricultural land owned by the foreign investor, including the purposed purchase.
- The Federal Government will set up a foreign ownership register of agricultural land.
- From 1 July 2015, the ATO will start collecting information on all new foreign investment in agricultural land, regardless of value.
- Prime Minister Abbott said the new free trade deals with Korea, Japan and most recently, China made Australia a vastly more attractive investment destination now than it was 18 months ago, and that greater scrutiny was required in order to protect national interests.
- In addition to these changes to agricultural investment, further changes are also expected in the coming weeks which are aimed at foreign investment in residential real estate.
Whilst these new measures will see greater transparency for inbound investment in the agricultural sector, the lowering of the investment thresholds will ensure that Australia remains an attractive jurisdiction for foreign investment.