The Coalition Government announced last Friday that a review will be undertaken to ‘reboot’ the significant investor visa (SIV) program, in recognition that there are ‘significant implementation issues holding up the progress of this program’. It is expected that the proposed changes as a result of that review will result in an increase in the number of SIV applications due to the broader scope of complying investments and a streamlined approval process.
Assistant Minister for Immigration and Border Protection Michaelia Cash identified that the Department of Immigration and Border Protection’s (DIBP) internal review of the SIV program will be conducted in close consultation with external stakeholders and the financial services industry.
The SIV is attractive to wealthy investors who would otherwise be unable to obtain temporary or permanent residency in Australia, with 90 percent of applicants from China.
The SIV program was introduced in November 2012 and has the potential to bring in hundreds of millions of dollars in complying investments, by requiring an upfront $5 million investment by visa applicants. At 31 December 2013, the DIBP had received 943 expressions of interest, representing approximately $5 billion in investments.
The types of complying investments in managed funds were expanded in November 2013 to enable managed funds to directly invest in loans secured by mortgages in real property in Australia. It has been reported that the Government’s review will seek to speed up the approval process and will consider expanding the types of complying investments even further to include venture capital and start-ups.
Depending on the type of investment, SIV applicants may require Foreign Investment Review Board (FIRB) approval before making a complying investment in Australia. After obtaining their visa, many SIV holders are moving to Australia and seeking to invest in real estate, with Credit Suisse estimating that Chinese investors could spend $44 billion over the next seven years on Australian real estate. An SIV investor will require FIRB approval to buy residential real estate in Australia, however in line with FIRB’s policy, approval for such acquisitions is generally granted provided that it is new residential premises or the property is to be used as the investor’s principal place of residence.