On 24 November 2012, the Australian Government will launch the 'Significant Investor Visa' as part of its Business Innovation and Investment Program.
The Significant Investment visa has been developed as an initiative to attract high net worth individuals who wish to obtain Australian permanent residence.
The key application requirement is the investment of at least AUD5 million into complying investments. Complying investments include:
- Commonwealth, State or Territory Bonds;
- Australian Securities and Investments Commission (ASIC) regulated managed funds with a mandate for investing in Australia; and
- Direct investment into Australian proprietary companies.
Investments can be held in one or more of these investments options and in any proportion. In addition, there is flexibility in terms of changing between complying investments. Investment in property is not considered a complying investment, however, applicants can invest in ASIC regulated managed funds which may invest in real estate in Australia.In a remarkable development, there is no upper age limit, points test requirement or English language threshold for applicants. However, standard health and character requirements still apply. Also, applicants must demonstrate the assets or funds used to make the complying investment are unencumbered and lawfully acquired.
Successful applicants will obtain a provisional visa for 4 years after which time they will be eligible to apply for permanent residence.
The grant of permanent residence is dependent on the maintenance of the investment during the 4 year period and on spending a specific amount of time in Australia during this period (the "residence requirement").
Fortunately, the residence requirement is minimal and equates to around 40 days per year giving provisional visa holders the freedom to spend the majority of time outside Australia during the 4 year period. This feature will be highly attractive to individuals with ongoing overseas business and/or personal ties.
Provisional visa holders will be permitted to manage their investment themselves or engage a third party to do so. However, apart from requiring the investment to be made, the Government will not take any role in the applicant's investment decisions and cannot guarantee any return on the investment. Applicants are expected to be aware the value of their investment could increase, decrease or be lost altogether.
Provisional visa holders will not be required to 'top up' their investment if it falls below AUD5 million during the provisional visa period. By the same token, if the investment increases above AUD5 million the holder is not permitted to withdraw the increased value.
Interestingly, investments made prior to applying for the visa can be counted towards the AUD5 million if they fall within the definition of a complying investment. However, these investments must be held by the individual for 4 years after becoming a provisional visa holder in order to transition to permanent residence.
Investments can be held directly or through various structures including through ownership of all shares in a company or as both the trustee and beneficiary of a trust.
Once a provisional visa holder has been granted a permanent visa the complying investment need not be maintained. However, the permanent visa holder will be expected to have a genuine and realistic commitment to maintain business or investment activities in Australia.