In summary

The Treasurer announced that all proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 will now require Foreign Investment Review Board (FIRB) approval.  This will affect direct investment into all sectors of the Australian economy and will operate for the foreseeable future.

In detail

Amid all the surprise announcements over the last 2 weeks, the announcement late Sunday night about changes to the foreign investment rules was perhaps the most unexpected.


The Treasurer announced, with immediate effect, that, 'all proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 will require approval, regardless of value or the nature of the foreign investor.'  The new policy will be effected by reducing the various monetary thresholds in the Act to $0. 

There is little more detail available at this stage but it seems the new policy will apply:

  • to all foreign investments that are (ignoring size) regulated under the Act, meaning it will extend to all direct foreign investment;
  • to new foreign investments only (meaning the investor had not entered a binding commitment to make the investment prior to 10:30pm on Sunday 29 March);
  • indefinitely (the measures will remain in place 'for the duration of the current crisis').


This announcement will affect investments into all sectors of the Australian economy. Under the regime as it stood last week, FIRB approval was especially relevant for investment into residential and commercial real estate, including vacant land, and into agriculture, both primary production and processing, or if the investor was a foreign government.  But the requirement for FIRB approval also extended to anyone starting a new business in Australia, or making a sufficiently large direct investment in an existing business (ie, spending over the monetary threshold to acquire a 20% stake in the business).  More nuanced rules applied for investments in economically sensitive areas such as the media, banking and natural resources.

By removing the monetary threshold, the new regime effectively means FIRB approval will be needed for any direct investment by a foreign or foreign-owned entity, into all sectors of the Australian economy.  In certain cases, the rules can also extend to indirect acquisitions of Australian businesses by buying the offshore holding entity. 

For those not familiar with the FIRB application process, it has become relatively common in recent times for the Australian Taxation Office (ATO) to be actively involved in reviewing and commenting on tax aspects related to FIRB approvals. As a result, it is now often necessary to include in the FIRB application (or to disclose in response to separate ATO questions) details about existing and proposed funding structures with a focus on any cross-border related party funding or hybrid instruments.

Even as rules are being tightened, the Treasurer wanted to re-assure foreign investors that, 'this is not an investment freeze' and the Board will, 'prioritise urgent applications for investments that protect and support Australian business and Australian jobs.'

FIRB will be amending its administrative procedures to accommodate this new regime, and this includes allowing FIRB to take up to 6 months (instead of 30 days) to review an application.