FIRB reforms: a strengthened and streamlined approach

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No new exemptions will be implemented, but FIRB has announced it will streamline applications for investors.
Australia Government, Public Sector
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On 1 May 2024, the Treasurer announced a 'major overhaul of our foreign investment framework' to strengthen and streamline the regime through an update to Australia's Foreign Investment Policy (Policy).1

The changes, which will generally be implemented administratively by the Foreign Investment Review Board (FIRB) when assessing applications rather than through new legislation, are aimed at implementing a risk-based approach to FIRB's assessment of transactions, flagging a streamline of approval processes for low risk transactions, and greater scrutiny for transactions in sensitive sectors or with 'high risk' characteristics.

Key findings

  • While no new exemptions will be implemented, FIRB has announced it will streamline applications for repeat investors with a strong track record of compliance and passive investors investing in non-sensitive sectors,2 and will target approving 50 percent of applications within the 30-day statutory review period.
  • Applications for transactions in sensitive sectors3 or with 'high risk' (generally tax) characteristics will be subject to greater scrutiny and accordingly will be likely to take longer to process, although greater resources are to be made available to FIRB.
  • Refunds of FIRB filing fees will be provided to unsuccessful participants in competitive auction processes.
  • The Policy reaffirms previously announced proposed changes to facilitate Build to Rent developments, but the crucial details are still to be released.
  • The Australian government is focused on attracting investment to help deliver the energy transition, increase the housing supply, grow Australia's critical minerals industry and help Australian businesses commercialise new critical technology ideas.

Areas of focus

Housing, energy transition and Future Made in Australia focus

The Policy expressly states that it is particularly focused on attracting investment in key areas, including those that:

  • Help to deliver the net zero transformation alongside domestic private and government capital. An effective transition will deliver cheaper, cleaner and more reliable energy systems for Australia.
  • Increase Australia's housing supply by supporting investment in new housing stock consistent with the Government's housing agenda, including through investment in Build to Rent developments.
  • Support the objectives of Australia's Critical Minerals Strategy to grow the sector, create jobs and downstream industries, diversify global supply chains, help Australia to become a renewable energy superpower, and contribute to global efforts to achieve net zero.
  • Harness the potential of critical technologies to encourage competition and diversify industries, accelerate the development and uptake of new innovations and frontier technologies, and help Australian businesses commercialise new critical technology ideas.

Strengthening – stronger scrutiny

  • Stronger scrutiny: FIRB has flagged 'stronger scrutiny' of investment proposals in sensitive sectors, and proposed that greater resources will be provided to FIRB to enable more effective and efficient consultation across government, and appropriate analysis of the economic benefits and security risks arising from these more complex investment proposals. This approach may result in applications needing to more clearly and fulsomely articulate the benefits of the transaction, and FIRB imposing more extensive conditions on its approvals.
  • Sensitive sectors: Sensitive sectors include:

    • critical infrastructure;
    • critical minerals;
    • critical technology;
    • investments in proximity to sensitive Australian Government facilities; and
    • investments which involve holding or having access to sensitive data sets. Many of these sectors already require a mandatory notification and no changes have been proposed to the types of transactions requiring mandatory notification.

  • Tax focus: Additional scrutiny will be applied to foreign investment proposals with certain tax characteristics likely to be considered higher risk, including:

    • investments that are structured through effective low or no tax jurisdictions where there is limited relevant economic activity taking place;
    • internal reorganisations or other intragroup transactions which may represent initial steps of a planned broader arrangement resulting in avoidance of Australian tax;
    • pre-sale structuring of Australian assets that present risks to tax revenue on disposal by private equity or other investors;
    • the use of related party financing arrangements to reduce Australian income tax or avoid withholding tax (noting recent strengthening of Australia's thin capitalisation rules); and
    • facilitation of migration of assets (for example, intellectual property) to offshore related parties in jurisdictions with effective low taxation. We expect that this will also include recommendations for more expansive tax conditions.

  • Post transaction reviews:

    • Greater resources will be provided for FIRB and/or the ATO to follow up or review a greater number of transactions following completion to consider compliance with any FIRB-imposed conditions and Australia's tax and other laws. This includes an ability to undertake on-site visits.
    • The Policy reiterates FIRB's ability to call-in transactions which pose national security concerns for review and suggests this power will be used more often.


  • Faster approval times: while noting that each investment will continue to be considered on a case-by-case basis, and there are no guarantees on timeframes for assessment, FIRB has indicated that the following types of investment proposals provide an indication of where faster approvals may occur:

    • Who: Investors with a strong track record of compliance with the foreign investment framework and other Australian laws, repeat investors who are well known to FIRB, investing alone and not in a consortium with unknown investors and investors who are genuinely passive in nature and can demonstrate no control or influence over an asset.
    • What: Investments in non-sensitive sectors, such as manufacturing, professional services, commercial real estate, new housing and mining of non-critical minerals and investments not near sensitive Australian Government facilities.
    • How: Transactions which are not complex or 'convoluted', and where the ownership structure is clear, including a clear articulation of who will ultimately control the asset, land or entity once the proposed transaction is complete. Repeat investors from 'Five Eyes' countries, in particular, may benefit from this approach, and it is hoped that this process will mean a low number of FIRB consult partners will need to be involved in the application process, as this is often where the delays occur.

  • Lowering administrative burdens: FIRB has announced an intention to reduce the administrative burden on repeat investors, where the ownership information has not changed since their previous foreign investment application and this is advised to FIRB early in the process. For private equity and other financial sponsor investments, it is not clear yet how this will be implemented, particularly given different transactions will often have unique investment and co-investment structures (and replicating upstream fund information is generally not materially burdensome).
  • Timing targets: FIRB will adopt a new performance target of processing 50 percent of investment proposals within the 30-day statutory decision period from 1 January 2025, and has suggested that most applications will have improved processing times from 1 July 2024.
  • Competition analysis: From 1 January 2026 when mandatory notifications are expected to be implemented under Australia's merger control system, FIRB has indicated that information provided to the ACCC on competition issues will mostly be sufficient for the consideration of competition issues under the foreign investment framework. Given applicants will generally proactively engage with the ACCC at the same time as submitting their FIRB application, this does not appear to be a significant shift.
  • Internal funding transactions: FIRB has released draft regulations that introduce exemptions for passive or low-risk interfunding transactions from mandatory notification requirements (and fees) under the foreign investment framework.

Other developments

  • Competitive processes: FIRB will refund application fees for foreign investments that do not proceed because the investor was unsuccessful in a competitive bid process. This is a welcome development, particularly to assist in shortening the pre-completion period.
  • BTR: FIRB has confirmed earlier announcements allowing foreign investors to buy established Build to Rent developments, and applying lower application fees to this type of investment. However, defining the scope of what constitutes a Build to Rent development remains outstanding and a key issue for this proposed reform (and the associated tax reforms).
  • Housing for PALM employees: FIRB has clarified that in rural and regional areas where labour supply is tight, Pacific Australia Labour Mobility (PALM) employers are able to buy established residential properties for their PALM workers.

What's next?

Draft regulations to implement some of the above announcements are subject to consultation in May 2024. However, the substantive changes are reliant on FIRB's behind the scenes processes being updated and FIRB being provided with greater resources.



2 Manufacturing, professional services, commercial real estate, new housing and mining of non-critical minerals.

3 Critical infrastructure, critical minerals, critical technology, investments in proximity to sensitive Australian Government facilities and investments which involve holding or having access to sensitive data sets.

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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