While the release of the 2015 Federal Budget displayed a
strong focus on small business, child care and a crackdown on tax
avoidance by multinationals, there are also considerable changes
for foreign investors involved in the property market.
On 2 May 2015, the Federal Government announced a package of
reforms to strengthen the foreign investment framework. This
followed the release in February 2015 of an Options Paper which
received 192 responses. At the time of this newsletter the Foreign
Investment bills have been introduced to Parliament and are
expected to apply from 1 December 2015. Key aspects include:
The Australian Taxation Office will be given responsibility for
regulating foreign investment in residential real estate, including
stronger enforcement, audit and compliance of the existing
Greater enforcement will be supported by enhanced data matching
systems to detect instances of potential non-compliance.
A foreign ownership of land register will be established to
monitor the level of foreign ownership of Australian real estate
Application fees for foreign purchases of real estate will be
Additional and more stringent civil and criminal penalties will
be introduced for breaches under the Foreign Acquisition and
Takeovers Act 1975 (Cth).
NEW APPLICATION FEES
Application fees on all foreign investment applications will be
introduced from 1 December 2015.
For residential real estate, the fees are as follows:
$5,000 for property valued under $1 million
$10,000 for property valued over $1 million
$10,000 incremental fee per additional $1 million in property
Other application fees for business and agriculture include:
$25,000 for commercial real estate
$100,000 for business acquisitions where the value of the
target's assets are greater than $1 billion
$5,000 for rural land valued under $1 million
$10,000 incremental fee per $1 million in property value for
rural land equal or greater than $1 million.
NEW CIVIL AND CRIMINAL PENALTIES
Tougher penalties for individuals, companies and third parties
(including lawyers and real estate agents) who knowingly assist
breaches will be introduced.
For residential real estate, the maximum criminal penalty for
individuals will increase to $135,000 or 3 years imprisonment and
for companies an increase to $675,000. The maximum civil penalty
will be the greater of capital gain or 25% of the value of the
For business and agriculture investments, the maximum criminal
penalties mirror those for residential real estate and the maximum
civil penalty is $45,000 for individuals and $225,000 for
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This decision has implications for Government authorities and corporations, and for private sector project proponents.
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