With a new Register of Foreign Ownership of Australian Assets set to commence on 1 July 2023, foreign investors should take note of the new requirements.

Key takeouts

  • The new Register of Foreign Ownership of Australian Assets is set to commence on 1 July 2023. The Register will be maintained by the ATO and will consolidate and streamline several existing registers.
  • Importantly though, it's not just a simple amalgamation of existing registers. The new Register will capture a broader range of interests acquired by foreign investors than before, particularly in relation to commercial land. Foreign investors should review and update their internal procedures to ensure adequate monitoring of and ongoing compliance with the new requirements.
  • From 17 June 2023, the ATO will introduce new online services for foreign investors. Foreign investors and their representatives will need to get a myGovID to use the service.

On 1 July 2023, the new Register of Foreign Ownership of Australian Assets (Register) is expected to commence. Foreign investors will be required to report certain investments in Australian assets and other related matters to the ATO, to enable it to maintain the Register.

The legislative framework for the Register was introduced in 2020 under Part 7A of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), although the commencement of the Register is yet to be proclaimed. The proclamation is expected to be made in June 2023. The Commissioner of Taxation will administer the Register.

The Register will consolidate and replace several existing registers currently maintained by the ATO, being:

  • the Register of Foreign Ownership of Agricultural Land;
  • the Register of Foreign Ownership of Water Entitlements; and
  • the ATO’s register of foreign-held interests in residential land.

Other government registers that cover foreign ownership of certain assets, namely the Register of Foreign Owners of Media Assets and the Register of Critical Infrastructure Assets, are not affected by these reforms and are not being amalgamated into the new Register.

The purpose of the Register is to give the Australian government greater visibility of foreign ownership of Australian assets. Information on the Register will not be publicly available, however the Commissioner of Taxation (as Registrar) is required to provide a report to the Treasurer each financial year, for presentation to Parliament, including statistics derived from information on the Register.

The Register will capture a broader range of interests acquired by foreign investors than before, particularly in relation to commercial land. The specifics of what must be registered are addressed in the tables below. Foreign investors should note that the Register covers both the acquisition and divestment of certain interests, changes in the levels of interest held in assets and changes in investors’ circumstances (for example, an investor ceasing to be a foreign person). Therefore, ongoing monitoring by foreign investors of their registrable actions and circumstances will be crucial to ensure compliance. Foreign investors’ obligations to report transactions after they have occurred for inclusion on the Register are separate and distinct from their obligations to seek approval from the Treasurer before undertaking transactions. Some transactions that do not require pre-approval from the Treasurer must nevertheless be notified to the ATO once they have completed.

What needs to be registered?

Division 3 of Part 7A of the FATA outlines when a foreign investor is required to notify a transaction or a relevant change in circumstance to the ATO. The Treasury has recently completed consultation on draft amending regulations to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (FATR) (exposure draft regulations), which seek to include additional notification requirements for actions in relation to Australian media businesses, actions taken by foreign government investors, and actions covered by exemption certificates.

Notification is made by giving a ‘register notice’ (discussed further below). Notification is typically required within 30 days of the date of the action or circumstance event being notified (the ‘registrable event day’).

The below tables summarises the actions that must be notified to the ATO:

Register notice required whenever…

The executors and administrators of deceased persons’ estates must give a register notice to the ATO where the person dies before giving a register notice as required under the FATA. Similarly, corporate liquidators must give register notices where a corporation is wound up before giving a register notice that was required.

How to register?

As noted above, notification is made by giving a register notice. The ATO as Registrar is empowered to determine the manner and form of register notices, information and documents that must be supplied with the register notice, how information held by the Registrar is to be stored, and other matters. It is expected that multiple notifications will be able to be covered by a single register notice. There is no fee for giving a register notice.

In February this year the ATO circulated a draft data standard setting out the information likely to be required in a register notice. Although yet to be finalised, the information required is expected to include:

General information

  • details of the foreign investor submitting the register notice (or the foreign investor on whose behalf a register notice is being submitted)
  • the reason for providing the register notice
  • the date of the relevant action and the registrable event day
  • the consideration paid for the interest

Land acquisitions

  • the nature of the land (agricultural, commercial or residential)
  • current and intended use of the land
  • location and size of the land
  • land title details
  • if relevant, information about the terms of any lease
  • percentage of interest held

Entity or business acquisitions

  • particulars of the entity or business in which the foreign investor has acquired an interest
  • the main location of the entity or business
  • the business structure and industry sector of the entity or business
  • the percentage interest acquired in the entity or business
  • the ANZSIC code of the entity or business

Mining or production tenement acquisitions

  • tenement licence details, e.g., tenement type, date of issue, expiry, renewal, State or Territory of issue, etc.
  • location and size of the tenement (in hectares)

Register notices will need to be submitted online using the ATO’s new online services for foreign investors. The service is expected to be active from 26 June 2023.

Setting up a myGovID

Foreign investors and their representatives will need a myGovID to access the service. myGovID is the Australian Government’s digital identity application, used to authenticate users who log in to use government services online.

Foreign investors should note the key points below so they are well prepared to use the new system once it goes live:

  • Foreign investors should get ahead of the new requirements by signing up for a myGovID now.
  • A myGovID should be set up using an individual email address (rather than an generic email or group inbox address).
  • Foreign investors without an Australian Business Number (ABN) will need a myGovID with ‘Basic’ identify strength, at a minimum.
  • Foreign investors with an ABN will need a myGovID with a ‘Standard’ or ‘Strong’ identity strength.
  • Once they have created a myGovID, foreign investors can authorise representatives to act on their behalf by linking their myGovID to their proposed representatives.
  • Representatives of foreign investors will need to set up their own myGovIDs, and will need to provide the following information to the foreign investor for linking purposes, the full name used to set up the myGovID, and an email address that can only be accessed by the representative.

Further details about the authorisation process are expected to be published on the ATO website from 26 June.

Impact for foreign investors

Additional compliance requirements

The new Register requirements will impose a greater compliance burden on foreign investors than under the existing regime. Foreign investors will be required to ensure they assess the Register requirements for all relevant transactions. In particular, some acquisitions of interests in land that do not require prior approval from the Treasurer (for example, foreign private persons entering into a simple office lease) may need to be to be notified to the ATO for inclusion on the Register. Once foreign investors have provided a register notice, ongoing monitoring will be required to ensure any relevant changes in circumstances are reported as well.

The existing reporting obligations, contained in sections 98C–98E of the FATA, will continue. Under the exposure draft regulations, the giving of a register notice will discharge a foreign investor’s obligations under section 98C–98E, minimising the duplication of reporting requirements. However, where an action does not need to be notified for Register purposes (for example, the acquisition of equitable interests in Australian land), a foreign investor will still need to comply with the other notification requirements in the FATA.

Enforcement

The new Register requirements, combined with the new online system for making register notices, will take some getting used to. It is hoped that the ATO will take a lenient approach to compliance action in the initial phase of the rollout of the Register. Under the FATA, failure to comply with the Register requirements will be subject to a penalty of 250 penalty units, currently equivalent to A$68,750.

The Registrar may disclose information on the Register to certain other Australian Government personnel for the purposes of exercising powers under the FATA. Information gleaned from the Register could assist the ATO and FIRB in pursuing enforcement action under the FATA (for example, where Register information reveals that a foreign person failed to obtain the necessary approval before taking an action).