AUSTRALIAN FOREIGN INVESTMENT INFORMATION QUEENSLAND.
Foreign investment – disclosure and approval for interests in Australian property
Foreign investors need to plan and act now to comply with Australia’s changes to foreign investment rules.
Will you be affected by these measures?
You will be affected by these measures if you acquired the interest in the Australian land when you were a “foreign person” as defined for FIRB purposes (and not according to tax or immigration principles).
Therefore non-citizens who have not been in Australia for 200 days in the last 12 months; and
Individuals who are not able to stay in Australia indefinitely (e.g. temporary residents).
A “foreign person” (for FIRB purposes) is broadly defined as the following:
- An individual not ordinarily resident in Australia (the FIRB “ordinarily resident” concept is not the same as the “resides test” concept used to determine tax residency of individuals); or
- A company or trust in which an individual not ordinarily resident in Australia, a foreign company or a foreign government holds a substantial interest (either alone or together); or
- A foreign government; or
- Someone described in the regulations (still to be released) to be a foreign person.
An individual who is not an Australian citizen will not be ordinarily resident in Australia for FIRB purposes – and hence a “foreign person” – if:
The individual has not been in Australia for at least 200 days in the 12 months immediately preceding the time of testing (e.g. the time of acquiring the property); and
The individual is not able to stay in Australia indefinitely (e.g. temporary residents or bridging visa holders).
Act now and register interests in agricultural land!
Foreign investors must register their interests in Australian agricultural land with the Australian Taxation Office regardless of the land value.
All existing holdings in agricultural land must be registered by 31 December 2015.
To register you will need the following information:
- Entity details
- The Foreign Investment Review Board approval number, if applicable
- The land location, size and usage details
- Land title information, and
- Size or level of foreign investment interest.
Any new interests or changes to existing holdings in agricultural land must be registered within 30 days of acquisition/change.
From 1 March 2015, the threshold relating to agricultural land will be reduced to $15 million. The threshold will be cumulative based on the total value of agricultural land owned by the foreign investor. The change to the threshold does not prevent investment in agricultural land where the investor owns or would own land worth in excess of $15 million however investments in excess of $15 million are subject to an application to the Foreign Investment Review Board and require approval from the Board and ultimately from the Treasurer. In determining whether to grant approval, the Board will work with State and Territory Governments and consider the implications of the acquisition on Australia’s national interest.
Changes relating to interests in residential property
Earlier this year the Australian Government announced its intention to commence a residential real estate register using data from the states and territories. From 1 July 2016, it is intended that the Australian Taxation Office will also be responsible for this new register recording the foreign ownership of all Australian residential real estate.
Have you breached the residential real estate rules?
Foreign investors have until 30 November 2015 to take advantage of reduced penalties and disclose any breaches of the rules for residential real estate purchases. A breach includes a failure to seek approval with the Foreign Investment Review Board prior to purchasing residential real estate in Australia, or if you have breached the conditions of your FIRB approval, for example if you are on a temporary visa and have rented out the premises or purchased additional properties, or have purchased properties on behalf of a foreign investor who is a foreign non-resident and has failed to disclose their interest. Depending on the circumstances, investors may be given retrospective approval, be eligible for up to twelve months to divest the property, and not be referred for criminal prosecution or the associated penalties.
The current rules relating to temporary residents and residential real estate are as follows:
Established (second-hand) dwellings
Temporary residents need to apply if they wish to buy an established dwelling. Only one established dwelling may be purchased by a temporary resident and it must be used as their residence in Australia. Such proposals are normally approved subject to conditions, including that the temporary resident sells the property within three months of it ceasing to be their primary residence (including where the temporary resident leaves Australia or otherwise becomes ineligible to maintain ownership of the property).
Temporary residents cannot buy established dwellings as investment properties, but can buy established dwellings for redevelopment (in certain situations).
Temporary residents need to apply if they wish to buy new dwellings in Australia. Such proposals are normally approved without conditions.
Temporary residents need to apply if they wish to buy vacant land for residential development. These are normally approved subject to conditions (such as, that construction begins within 24 months).
The current rules relating to foreign residents (excluding temporary residents) and residential real estate are as follows:
Established (second-hand) dwellings
Non-resident foreign persons, including individuals, foreign companies, Australian companies controlled by foreign persons and trustees of trusts for the benefit of foreign persons (irrespective of whether the trust is set-up in Australia or elsewhere) cannot buy established dwellings as investment properties or as homes, unless one of the exemptions below apply.
Foreign persons that operate a substantial Australian business need to apply to buy established dwellings to house their Australian based staff. Such proposals are normally approved subject to conditions (such as, that the foreign person sells the property within three months if it is expected to remain vacant for six months or more).
Foreign persons need to apply to buy established dwellings for redevelopment (that is, to demolish the existing dwelling and build new dwellings). Proposals for redevelopment are normally approved as long as the redevelopment increases Australia’s housing stock (at least two dwellings built for the one demolished) or where it can be shown that the existing dwelling is derelict or uninhabitable. Approvals are usually subject to conditions.
Foreign persons need to apply to buy new dwellings in Australia. Such proposals are normally approved without conditions.
Foreign persons need to apply to buy vacant land for residential development. These are normally approved subject to conditions (such as, that construction begins within 24 months).
The following exemptions are available to the above rules relating to residential property:
You do not need Government approval to buy residential real estate if you are:
- An Australian citizen (living at home or overseas) or you are ordinarily resident in Australia;
- A New Zealand citizen;
- A foreign national who holds an Australian permanent resident visa; or
- A foreign national buying a property as joint tenants with their Australian citizen spouse.
Regardless of your citizenship or residency, you do not need Government approval for:
- New dwellings bought from a developer that has pre-approval to sell them to foreign persons;
- An interest in a time share scheme that allows you (and any associates) to use it for up to four weeks per year;
- Certain residential real estate in Integrated Tourism Resorts — see below;
- An interest acquired by Will or devolution by operation of law; or
- An interest acquired from a Government in Australia (Commonwealth, State or Territory, or local) or a statutory corporation formed for a public purpose.
Other exemptions may apply if you are:
- A company, trust or managed investment scheme (primarily) for the benefit of individuals ordinarily resident in Australia;
- An Australian corporation that is owned by individuals who are exempt or an Australian trust for the benefit of such individuals;
- A corporation that is providing custodian services; or
- Buying shares in certain Australian urban land corporations that are publicly listed on an Australian Stock Exchange, or units in certain Australian urban land trusts.
New penalty provisions will apply to those that don’t follow the rules, effective 1 December 2015. Existing criminal penalties will be increased and divestment orders will be supplemented by civil pecuniary penalties and infringement notices.
Third parties who assist foreign investors to breach the rules will also be subject to new civil penalties, so it makes sense to act now.
To disclose, and take advantage of the reduced penalty period, you must act before 30 November 2015.
For more information about Australian foreign investment laws contact our office on 07 5474 0711.
Foreign property investment in Queensland Australia
Our accounting firm’s head office is located at Noosa on the QLD Sunshine Coast. Our expertise is unparalleled and thus we work with clients living interstate around Australia and internationally.
We offer the full range of services expected of a leading edge accounting firm. Our personal services for individuals include accounting, tax returns, superannuation funds and financial planning, estate planning, insolvency services and asset protection. Our approach to both our clients is practical, open and honest.