The Commonwealth Government announced on 11 February 2015 a significant reduction in the monetary threshold that applies to the purchase of agricultural land by foreign persons.
This change will significantly increase the number of foreign persons requiring FIRB approval prior to acquiring an interest in agricultural land.
What is the new notification threshold?
The FIRB notification threshold for agricultural land has been reduced to A$15 million. The previous FIRB notification threshold for a foreign person acquiring an interest in a primary production business was A$248 million.
The new A$15 million threshold applies to the cumulative value of agricultural land owned by the foreign investor, including the proposed purchase.
This is the first time a cumulative value threshold had been applied under the FIRB regime.
How will this change affect you?
If you are a foreign person (for the purposes of the Foreign Acquisition and Takeovers Act 1975) you must notify FIRB before you acquire an interest in agricultural land exceeding A$15 million.
Once you own agricultural land valued at more than A$15 million you must notify FIRB of any further acquisitions irrespective of value.
Who does this change apply to?
The change applies to foreign persons (for the purposes of the Foreign Acquisition and Takeovers Act 1975) other than foreign investors from New Zealand, the United States and Chile (for whom a A$1,094 million threshold will apply).
When does the change take effect?
The new threshold takes effect from 1 March 2015.
It is not yet clear if the new threshold will apply to acquisitions that are under contract prior to 1 March 2015 but settle after that date.
Are there any other changes being proposed?
Yes. The Commonwealth Government has also announced that with effect from 1 July 2015 the ATO will administer a foreign ownership register which will collect information on all new foreign investment in agricultural land regardless of value. The ATO will also commence a stocktake of existing agricultural land that is owned by foreign persons.
Details of the policy change are yet to be released. FIRB has confirmed that the new threshold will be implemented by way of a change to Australia’s Foreign Investment Policy.