Australia: Doing Business in Australia - Invest in Australia

Last Updated: 30 April 2012
Article by Tony Holland


Australia recognises that foreign investment can contribute substantially to developing its industries and resources and has framed a foreign investment policy to encourage it. The policy aims to ensure foreign investments are both consistent with Australia's needs and enhance its economic development.

Foreign investment is seen as contributing to the economic objects of enhancing domestic savings, providing scope for higher economic growth, creating employment opportunities, providing access to new technology, skills and overseas markets, as well as helping develop internationally competitive and export-oriented industries.

Regulatory framework

Foreign inevestment regulation by the Federal Government

The Federal Government's regulation of foreign investment has two main aspects. The first is the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the regulations made under FATA. The second consists of various ministerial statements and policy guidelines issued from time to time. The Federal Treasurer, assisted by the Foreign Investment Review Board (FIRB), administers this regulation.

FATA, and the regulations made under it, allow government scrutiny of proposed purchases by foreign persons of shares in companies incorporated or having assets in Australia and Australian real estate. Annually indexed monetary thresholds exist for notifying FIRB of individual investment proposals, with separate thresholds for investors from the US under the Australia-United States Free Trade Agreement (AUSFTA). The Federal Government has the power to block notifiable proposals determined to be contrary to the national interest or may impose conditions on an approval.

FIRB examines foreign investment proposals and advises the Treasurer whether or not they comply with Australia's foreign investment policy. It also generally advises the Federal Government on foreign investment matters and can assist foreign investors to ensure their proposals conform with government policy.

Non-real estate acquisitions of less than AU$244 million are generally exempt from compulsory notification, whilst larger proposals generally will be approved unless judged to be contrary to the national interest. As noted below, all investments by foreign governments and their related entities require notification. When evaluating larger proposals, FIRB will seek input from relevant parties, including from other government agencies.

Specific industry regulation

Other specific federal legislation may also limit permissible levels of foreign investment in specific situations (such as investments in international aviation, banking, airports, ships and Telstra Corporation Ltd).

Foreign investment regulation by state governments

There is legislation in each of the states and the territories restricting the level of foreign investment in companies in certain regulated industries. In some cases, foreign investment in specific companies is not possible.

While regulated industries and regulations vary between states, normally they apply to the mining, gambling, insurance and liquor industries. Professional advice should be sought and any restrictions carefully reviewed before deciding to invest in these areas.

Foreign persons

Australia's foreign investment policy regulates investments made by "foreign persons". A foreign person is defined in FATA as:

  • A natural person not ordinarily resident in Australia - a natural person who is a citizen of a foreign country will be taken to be not ordinarily resident in Australia, unless that person has actually been in Australia for 200 days in the previous 12 months and there is no legal limitation on that person remaining in Australia indefinitely
  • A corporation in which a natural person not ordinarily resident in Australia, or a foreign corporation, holds a controlling interest
  • A corporation in which two or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate controlling interest
  • The trustee of a trust estate in which a natural person not ordinarily resident in Australia, or a foreign corporation, holds a substantial interest
  • The trustee of a trust estate in which two or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest.

Substantial interest, aggregate substantial interest and controlling interest

A foreign person will hold a substantial interest upon (either alone or with associates) controlling 15% of the actual or potential voting power in the corporation, or by holding 15% of the issued shares of the company.

Foreign persons will jointly hold an aggregate substantial interest upon controlling (including together with their associates) 40% of the actual or potential voting power in the corporation, or by holding 40% of the issued shares of the company.

A substantial or aggregate substantial interest will be described as controlling unless the Treasurer is satisfied the relevant party or parties are not in a position to determine the policy of the corporation.

Notification of proposal

Foreign investors should seek FIRB's approval in specific circumstances. Proposals for which FIRB approval should currently be sought include:

  • Acquisitions of substantial interests in existing Australian businesses whose gross assets exceed AU$244 million or where the proposal values the business at over AU$244 million. For US investors, the AUSFTA provides a notification threshold of AU$1,062 million, except for investments in prescribed sensitive sectors, which are subject to the AU$244 million threshold
  • All investments in the media of 5% or more, irrespective of value
  • Takeovers of offshore companies whose Australian subsidiaries or gross Australian assets are valued at AU$244 million or more, or the US investor threshold of either AU$1,062 million or AU$244 million for prescribed sensitive sectors
  • Direct investments by foreign governments or their related entities (including sovereign wealth funds), regardless of size
  • All proposals by foreign governments concerning either the establishment of new businesses, or obtaining of interests in urban land, in Australia
  • Acquisitions of interests in urban (non rural) land including interests that arise via leases, financing, and profit-sharing arrangements and companies in which Australian urban land makes up more than 50% of the value of its total assets that involve the:
    • Acquisition by a non-US investor of developed nonresidential commercial real estate valued at AU$53 million or more, or if the property is subject to heritage listing valued at AU$5 million or more
    • Acquisition of vacant real estate, regardless of value
    • Acquisition of residential real estate, regardless of value
    • Acquisition of shares or units in Australian urban land corporations or trust estates
  • Acquisitions of prospecting, exploration, mining or production tenements where they provide the right to occupy Australian urban land for periods likely to exceed five years and arrangements for the sharing of profits or income from Australian urban land
  • Proposals where any doubt exists as to whether they are notifiable, including various funding arrangements that include debt instruments potentially entered into with foreign persons.


  1. Investors from the US are defined as: national or permanent residents of the US, a US enterprise, or a branch of an entity located in the US and carrying on business activities in the US.
  2. On 16 February 2011, Australia signed an Investment Protocol with New Zealand extending to investors of that country the same treatment as that afforded to US investors; the protocol is envisaged to take effect in the near future.
  3. All dollar threshold figures are indexed annually on 1 January. The above figures are current as of 1 January 2012.

Foreign investors should be aware also of the control provisions relating to agreements affecting a corporation's affairs. Agreements pursuant to which a corporation not controlled by a foreign person becomes subject to a foreign person's control, or by which a company already under the control of a foreign person subsequently arranges for an additional foreign person to share control, should also be notified to FIRB. Advice should be sought prior to entering into arrangements of this type.

Contractual arrangements

Where parties propose entering into a notifiable transaction, the transaction should be made conditional on receiving approval under FATA. FATA stipulates that agreements involving foreign persons must be made conditional on approval.

National interest

In practice, offshore takeovers do not normally raise national interest issues. This is assessed on a case by case basis.

National interest considerations include:

  • National security
  • Competition in Australian markets
  • The effect on Australian tax revenues
  • The impact on the economy and the community and the character of the investor.

Proposals to acquire agricultural assets will also be considered having regard to the sustainability of Australia's national agricultural resources.

Though investments by foreign governments, state-owned enterprises and sovereign wealth funds are assessed on the same basis as private proposals, consideration is given to the foreign investor's commercial, strategic and political objectives in making the investment, for the purpose of identifying whether the transaction is in Australia's national interest. This includes an assessment of the level of independence from foreign governments.

Processing application and providing approvals

FIRB deals with proposals quickly and aims to provide a decision within 30 days of being notified. Once formally notified, the Federal Treasurer has 30 days to make a decision and a further 10 days to notify the parties concerned of the outcome.

If these time frames are not met, the government loses the ability to block the proposal or impose conditions on it. The government may, however, extend the process by up to 90 days by issuing an interim order.

Approval of proposals may be subject to the parties meeting certain conditions.


Sensitive commercial-in-confidence information is respected and appropriate security is given to all proposals submitted to FIRB. In assessing proposals FIRB does consult with other government departments and authorities. If third parties take action to obtain access to confidential information held by FIRB, the information will not be made available without the approval of its owner, unless a court orders otherwise. The government will normally defend any action through the courts to maintain the confidentiality of the information.


Australia supports foreign investment. The Federal Government and all states and territories offer support and in some cases investment assistance schemes, most of which require that the investment result in a net economic gain. No financial assistance or incentive is provided as "a right" and all applications are rigorously assessed and sometimes open to competition.


The Australian Trade Commission (Austrade) is the Federal Government's lead agency for assisting international companies to establish and build their business in Australia.

Austrade provides services and advice through an extensive global network with offices in over 50 countries, and has investment specialists in key locations around the world.

Austrade provides international businesses with a single, integrated point-of-contact for all trade and investment inquiries. Austrade's assistance includes helping foreign investors to find the right contacts, setting up site visits, clarifying regulatory procedures and preparing industry reports.

An example of a Federal Government program for foreign investment is the Major Projects Facilitation program, administered by the federal Department of Infrastructure and Transport, which simplifies and speeds up foreign companies' interactions with government at all levels, and reduces their compliance costs.


Each state and territory in Australia also has programs to facilitate investments in their jurisdictions. Examples include:

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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