The Australian Government recently introduced legislation into Parliament which will require that, from 1 July 2015, foreign persons holding interests in agricultural land must register those interests with the Australian Taxation Office (ATO) (regardless of the value of that land). All existing holdings must be registered by 31 December 2015 and any new (or changes to) interests must be registered within 30 days. Foreign investors who meet the criteria must register their interests at the Agricultural Land Register on the ATO website which can be found at www.ato.gov.au/aglandregister.
Foreign investors holding existing interests in agricultural land as at 1 July 2015 must register those interests by 31 December 2015. Non-compliance with the new legislation, such as failing to lodge documents on time, may result in civil and criminal penalties. For more information, please contact Carrie Follas or Teresa Lusi.
Summary of the new law
The Register of Foreign Ownership of Agricultural Land Bill 2015 (Register Bill) establishes, from 1 July 2015, a Register of Foreign Ownership of Agricultural Land (Register) to be administered by the ATO. The Register Bill allows increased scrutiny of foreign investment in agricultural land and increased transparency on the levels of foreign ownership in Australian agricultural land.
The Register will contain two separate parts:
- a basic part being a record of foreign persons with interests in Australian agricultural land on or after 1 July 2015; and
- a statistical part which will be published in 2016 by the ATO on a website.
While foreign persons are only required to report such interests in agricultural land to the ATO on or after 1 December 2015, if a person notifies the ATO of their interest before this, it is anticipated that the ATO would treat them as having complied with the requirement to give notice under the Register Bill.
The Register Bill sets out what interests in agricultural land must be reported to the ATO, by whom and by when.
Reporting of interests in agricultural land and by when?
The Register Bill creates two distinct reporting obligations:
- First, foreign persons who held interests in agricultural land on 1 July 2015 must notify the ATO following commencement of the new law.
- Second, foreign persons (and persons who have since ceased to be foreign persons) must notify the Commissioner of certain events involving agricultural land that occur on or after 1 July 2015 by the later of 31 December 2015, or within 30 days of the event occurring.
The meaning of agricultural land has been expanded to mean land in Australia that is used, or that could reasonably be used, for a primary production business. ‘Primary production business’ has the same meaning as in the Income Tax Assessment Act 1997 (Cth) and broadly refers to production resulting from the cultivation of land, animal husbandry/farming, horticulture, fishing, forestry, viticulture or dairy farming. The meaning of foreign person has also been extended to apply to foreign government investors.
What types of interests in agricultural land must be reported?
There are two types of interests, or changes to interests, in agricultural land that a foreign person must report:
- freehold interests; and
- rights to occupy agricultural land under a lease (including a sublease) or licence where the term of the lease or licence (including any extension or renewal) is reasonably likely to exceed 5 years.
Who must report?
Generally, the person with the direct legal interest is required to notify the ATO of their interest in agricultural land. That is, the person who holds the freehold interest (alone, as a tenant in common or a joint tenant) or the right to occupy land under a lease (including a sublease) or licence. Where there are multiple foreign persons with a legal interest in agricultural land, each foreign person has an obligation to report their interest. However, an agent may give notice on their behalf.
The ATO website contains links to the relevant online forms to be completed depending on whether the foreign person is an individual, partnership, company or trustee. If multiple land holdings or multiple owners need to be registered, foreign investors should contact the ATO on firstname.lastname@example.org and request a multi-entry form for this purpose.
Further improvements to the online forms will be released in the coming months so foreign investors should contact the ATO to ensure they receive the latest information, as using an older version of the online form may delay processing and the ATO may request a new form to be completed.