The Federal Government has provided more details on the proposed changes to Australia's foreign investment laws. This announcement follows the consultations on the Options Paper, which the Government released back in February 2015.
Fees and penalties from 1 December 2015
The latest announcement confirms the Government's intention to introduce new fees and penalties from 1 December 2015. As foreshadowed in the Government's previous announcements, the key measures are as follows:
- Fees: Application fees will be introduced for both residential and agricultural land starting from $5,000, as well as for advanced off-the-plan certificates and investments in commercial real estate, business and agriculture sectors starting from $25,000.
- Penalties: Tougher criminal penalties, civil penalties and infringement notices will be introduced for individuals and companies. These penalties will also be extended to third parties (such as lawyers, accountants and real estate agents) who knowingly assist breaches. Although the Options Paper's focus was on residential real estate, the Government has confirmed its intention to extend the new sanctions to business and agricultural investment applications.
The Government is urging foreign investors who have illegally bought residential real estate to self-identify and has announced a reduced penalty period up until 30 November 2015. Those who voluntarily come forward will be forced to sell their properties, but may be granted an extended divestment period of 12 months and may avoid criminal prosecution.
Establishment of a foreign ownership register
The Government has confirmed its commitment to establishing a foreign ownership land register. The ATO will commence collecting data in relation to agricultural land from 1 July 2015. The Federal Government is also in negotiations with the State and Territories to implement the whole package which will include a foreign ownership register for all land.
New threshold for investments in "agribusiness"
Further details were provided on the screening thresholds for foreign investment in agribusiness. The new threshold of $55 million is proposed for investments from all non-free trade agreement countries. The new threshold will also apply to investments from China, Japan and Korea, as the respective free trade agreements preserve the Government's ability to apply the lower threshold.
The higher threshold of $1,094 million will continue to apply for investments from the United States, New Zealand and Chile.
The Government has clarified the proposed scope of the new restrictions indicating that "agribusiness" will include primary production businesses as well as certain first stage downstream manufacturing businesses.
Further changes to look out for in the new legislation
On 1 March 2015 a lower threshold of $15 million was implemented for agricultural land (as opposed to "agribusiness"). The latest announcement once again flags changes to the current definition of "rural land" to reflect a more common understanding of agricultural land. The definition of "urban land" (which is currently defined in relation to "rural land") is also likely to change. Foreign investors in both the agribusiness and residential real estate sectors are encouraged to pay close attention to anticipated changes.
The Government is proposing to introduce the new legislation in the Spring sittings of Parliament.