The Turnbull Government’s robust new foreign investment regime comes into force today, providing stronger enforcement and a better resourced system with clearer rules for foreign investors, Treasurer the Hon. Scott Morrison announced today.
“The Government welcomes foreign investment that is not contrary to our national interest. Without foreign investment, production, employment and income would all be lower. But it is important that foreign investment is appropriately monitored to ensure that it benefits all Australians,” Mr Morrison said.
“Foreign investment rules need to be strong, effective and enforceable. The changes taking effect today follow the passage of the Government’s Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. They provide greater compliance powers to the Australian Taxation Office (ATO) and introduce strict new penalties for those caught breaking the rules.
“Foreign investors who have breached the residential real estate rules had until yesterday to voluntarily come forward under the reduced penalty period. From today any investors caught in breach of the rules will face severe penalties.
“The ATO has taken over full responsibility for enforcing residential real estate purchases by foreign citizens and existing criminal penalties have been increased to $135,000 or three years’ imprisonment, or both for individuals; and up to $675,000 for companies.
“New civil penalties supporting divestment orders and ensuring people who break the rules do not profit from their actions, also come into effect. These include forfeiting any capital gains made on divestment of a property and fines for third parties who knowingly assist foreign investors to break the rules. Under these new arrangements foreign investors who fail to comply with the foreign investment rules will not be able to profit from doing so.
“The Government has also introduced application fees so the cost of the system is no longer borne by the Australian taxpayer. From today fees will be levied on foreign investment applications.
“While foreign investment in agriculture provides important economic benefits, we have acted to improve scrutiny and transparency around foreign ownership of Australia’s agricultural production.
“The average farming business is smaller than other businesses in the economy and applying the general business threshold of $252 million excludes a large part of the agricultural sector from foreign investment screening.
“A new agricultural land foreign ownership register has been established, and the screening threshold for proposed foreign purchases of agricultural land by private investors has reduced to $15 million. In addition, from today direct interests in agribusinesses valued at $55 million or more will also be screened by the Foreign Investment Review Board.
“The Government is also expanding the agricultural land register to include residential land and water entitlements.
“The package of reforms also includes long overdue amendments that modernise the foreign investment framework, reduce red tape, and provide greater certainty for investors and the Australian community. Foreign government investors are now subject to the new legislation. While still requiring approval for all direct interests, the Government can now impose legally enforceable conditions to protect the national interest.
“The Government is also continuing to work collaboratively with the States and Territories to ensure that sales of critical infrastructure to foreign investors are properly scrutinised.
“The legislative package passed by the Senate last week represents the most significant reforms to Australia’s foreign investment framework in forty years. We are committed to strengthening the system so that Australians can be confident that foreign investment will not be contrary to the national interest,” Mr Morrison said.