On December 1, the Australian Government's "amnesty" for foreign investors in breach of foreign investment rules relating to residential property (foreign investment rules) came to an end. In its place are greater compliance powers for the Australian Taxation Office, higher federal government fees and tougher penalties for breaches.
In May, the government announced a seven month window giving foreign nationals who had purchased residential property in breach of foreign investment rules until 30 November 2015 to declare the breach and avoid a penalty. Foreign nationals who declared the breach and who remained in ownership of residential property in breach of the rules were required to sell within 12 months.
With the recent passage of the Foreign Acquisitions and Takeovers Legislation Amendment Act 2015 (Cth), Foreign Acquisitions and Takeovers Fee Imposition Act 2015 (Cth), and Register of Foreign Ownership of Agricultural Land Act 2015 (Cth) through Federal Parliament, as well as various pieces of new Regulation, important changes are now in effect and any investors in breach of the foreign investment rules, together with those who have assisted them, could face severe penalties.
A Bill was also recently introduced into Federal Parliament imposing a 10 per cent non-final withholding tax on payments made to foreign residents that dispose of certain taxable Australian property. Please click here to read more.
Snapshot of the new foreign investment regime
Increased penalties
- Existing criminal penalties have increased to $135,000 or three years' imprisonment, or both for individuals. Previously, individuals faced a maximum penalty of $90,000. Companies violating the rules will now face fines of up to $675,000.
New application fee
- Foreign applicants wanting to buy a residential property will now have to pay an application fee. For a property valued at $1 million or under, the fee is $5000. For a property valued over $1 million, the application fee is $10,000. For each additional million dollars the home is worth, the application fee increases by $10,000.
Property developers and third parties beware
- Property developers and third parties also face strict punishments for breaching foreign investment rules. Developers with exemption certificates who fail to advertise their new dwellings in Australia in accordance with the conditions of that exemption certificate now also face a maximum fine of $135,000 or three years' imprisonment. Third Parties who knowingly assist foreign investors to breach foreign investment rules are now subject to civil and criminal penalties, including fines of up to $45,000 for individuals and $225,000 for companies. A third party includes those persons who might provide services to facilitate the transfer of interests such as stockbrokers, lawyers, conveyancers, real estate agents and other advisors.
In the media
Buildings Day: GBCA commits to net zero
certification
The Green Building Council of Australia will introduce net zero
certification for buildings from 2016, it has announced as part of
the inaugural Buildings Day at COP 21 in Paris. The GBCA will push
for increased minimum energy efficiency standards in the Building
Code of Australia (04 December 2015).
More...
NSW
NSW home approvals strong but dipping
The Australian Bureau of Statistics for October show that New South
Wales home approvals are still strong but have been dipping over
the last two months, says the Urban Taskforce (01 December 2015).
NSW home approvals strong but dipping
Residential construction high in NSW but non-residential
slowing down
The September Quarter Australian Bureau of Statistics construction
figures for NSW indicate residential construction is strong but
non-residential construction is slowing down (26 November 2015).
Residential construction high in NSW but non-residential slowing
down
Practice and courts
ABCB Fixture Unit Ratings and Warm Water
Systems
The ABCB is currently undertaking a number of plumbing code
development and research projects two of which being Fixture Unit
Ratings and Warm Water Systems. These consultations are now
available for comment on the
ABCB website. Submissions close: Fixture Unit Ratings
discussion paper:27 November 2015; Warm Water Systems
Report: 11 December 2015.
Announcements, Draft Policies and Plans released 2015
NSW BPB: More qualifications recognised under
Accreditation Scheme
The Building Professionals Board now recognises more qualifications
as meeting accreditation requirements (04 December 2015)
More qualifications recognised under Accreditation Scheme
NSW BPB: Comment by 14 December 2015: regulation of
manufactured homes
A discussion paper on the regulation of manufactured homes is on
exhibit until 14 December 2015 (04 December 2015)
Comment by 14 December 2015: regulation of manufactured
homes
Cases
ACT Builders Pty Ltd v Haridemos [2015] NSWCATAP
256
CIVIL AND ADMINISTRATIVE TRIBUNAL- Appeal Civil and Administrative
Tribunal (NSW) – whether grounds raise questions of law -
s80, cl12 of schedule 4, whether decision fair and equitable
– whether decision against the weight of the evidence –
discretion to grant leave not enlivened – leave application
refused Denial of fairness- evidence provided in re-examination
Measure of damages- rectification of work not in accordance with
contract
More...
Black v Brereton [2015] NSWSC 1781
APPEAL – statutory appeal – application for leave to
appeal against a decision of the Appeal Panel of the New South
Wales Civil and Administrative Tribunal pursuant to s 83(1) of the
Civil and Administrative Tribunal Act 2013 (NSW) – whether
there are errors of law contained in the reasons for decision of
the Appeal Panel – dispute regarding timber flooring
ADMINISTRATIVE LAW – judicial review – whether the
plaintiff is entitled to relief in the nature of prerogative writs
– appeal dismissed.
More...
Damien v JKAM Investments Pty Ltd [2015] NSWCA
368
CONTRACT – respondent seeks to enforce alleged building work
debt – identity of contracting entity in dispute –
whether primary judge erred in finding that the appellant had
contracted with Architectural Collections Pty Ltd (ACPL) –
whether use of post-contractual conduct permissible - whether debt
validly assigned by ACPL to the respondent PROCEDURE –
whether primary judge erred by not allowing the appellant to tender
email correspondence.
More...
Nichols Constructions Pty Limited v Elphick [2015] NSWSC
1732
CIVIL – practice and procedure – separate question
– whether appropriate – whether breach issues should be
separated from all other issues.
More...
Legislation
NSW
Regulations and other miscellaneous instruments
Civil and Administrative Tribunal (Amendment No 3) Rule 2015 (2015-735) — published LW 4 December 2015
Federal
Foreign Acquisitions and Takeovers Legislation Amendment Act 2015
Foreign Acquisitions and Takeovers Imposition Fees Act 2015
Register of Foreign Ownership of Agricultural Land Act 2015
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.