The latest announcement confirms the Government's intention
to introduce new fees and penalties from 1 December 2015. As
foreshadowed in the Government's previous announcements, the
key measures are as follows:
Fees: Application fees will be introduced for
both residential and agricultural land starting from $5,000, as
well as for advanced off-the-plan certificates and investments in
commercial real estate, business and agriculture sectors starting
Penalties: Tougher criminal penalties, civil
penalties and infringement notices will be introduced for
individuals and companies. These penalties will also be extended to
third parties (such as lawyers, accountants and real estate agents)
who knowingly assist breaches. Although the Options Paper's
focus was on residential real estate, the Government has confirmed
its intention to extend the new sanctions to business and
agricultural investment applications.
The Government is urging foreign investors who have illegally
bought residential real estate to self-identify and has announced a
reduced penalty period up until 30 November 2015. Those who
voluntarily come forward will be forced to sell their properties,
but may be granted an extended divestment period of 12 months and
may avoid criminal prosecution.
Establishment of a foreign ownership register
The Government has confirmed its commitment to establishing a
foreign ownership land register. The ATO will commence collecting
data in relation to agricultural land from 1 July 2015. The Federal
Government is also in negotiations with the State and Territories
to implement the whole package which will include a foreign
ownership register for all land.
New threshold for investments in "agribusiness"
Further details were provided on the screening thresholds for
foreign investment in agribusiness. The new threshold of $55
million is proposed for investments from all non-free trade
agreement countries. The new threshold will also apply to
investments from China, Japan and Korea, as the respective free
trade agreements preserve the Government's ability to apply the
The higher threshold of $1,094 million will continue to apply
for investments from the United States, New Zealand and Chile.
The Government has clarified the proposed scope of the new
restrictions indicating that "agribusiness" will include
primary production businesses as well as certain first stage
downstream manufacturing businesses.
Further changes to look out for in the new legislation
On 1 March 2015 a lower threshold of $15 million was implemented
for agricultural land (as opposed to "agribusiness"). The
latest announcement once again flags changes to the current
definition of "rural land" to reflect a more common
understanding of agricultural land. The definition of "urban
land" (which is currently defined in relation to "rural
land") is also likely to change. Foreign investors in both the
agribusiness and residential real estate sectors are encouraged to
pay close attention to anticipated changes.
The Government is proposing to introduce the new legislation in
the Spring sittings of Parliament.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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