Foreign Investment in Australia | 24 Apr 2010

In an surprising back-flip from the existing policy, the Assistant Treasurer, Senator Nick Sherry, has announced a major tightening of the foreign investment rules as they relate to residential real estate and a package of tough new civil penalty, compliance, monitoring and enforcement measures.

Accoring to the media release from the Assistant Treasurer's office:

"The new provisions announced today will mean that anyone trying to flout Australia's strict foreign investment rules will face tough new penalties that will be fully enforced...  ...These changes will also be strictly applied to temporary residents who are here on foreign student visas."

Key changes to foreign investment in real estate rules
All temporary residents seeking to purchase an existing property in Australia will now be brought within the FIRB notification, screening and approval process.

Temporary residents will be required to notify, be screened or be approved by FIRB. Today's changes ensure that temporary residents are subject to the same compulsory notification, screening and approval requirements required of foreign non-residents.

In addition, temporary residents who are approved will now have to:

compulsorily sell the established property they have bought when they depart Australia; and
be required, where undeveloped land has been purchased, to commence construction on that land within 24-months or have the land compulsorily sold.
The Government will also work to put in place, for the first time, a full civil penalties regime that will apply to breaches of the foreign investment in Australian real estate regime. This will include a special penalty to recapture any capital gain made through an illegal purchase and sale of a property.

"If you are a temporary resident or foreign non-resident investing in Australian real estate, or a real estate agent working in this area, your activities will be proactively monitored with top-of-the-line data-matching and this will be backed up by tough new civil penalties."

"If you do the wrong thing, you will be found out."

New Civil Penalties
As part of the new civil penalties regime, the Government will introduce:

sanctions for purchasers, sellers and agents for being involved in transactions in breach of FATA;
an explicit compulsory divestment requirement where property has been purchased in breach of the real estate investment regime; and
an additional monetary penalty equivalent to any capital gain made by the breaching purchaser at the time of the forced sale, with the capital gain to be measured in accordance with the relevant tax legislation.
Expanded monitoring

FIRB will also undertake a significant new program of rolling three-way proactive data-matching using FIRB data, State and Territory lands and property office transactional data and Commonwealth Department of Immigration and Citizenship (DIAC) visa status data.

"I can confirm that we have already started this program through trials in Sydney and Melbourne," said the Assistant Treasurer.

"FIRB has undertaken a pilot data-matching program between itself and both Land Victoria and the New South Wales Land and Property Management Authority, and we will now add a third leg to this process by incorporating Department of Immigration visa status data."

"This will be rolled out nationally and FIRB has this week brought on board a data-matching and compliance specialist to spearhead this program."

For the full media release, click here

 For any clients concerned with the impact of this ruling or any  general visa migration/relocation enquries, please contact Life Relocation Migration team on the following link

Life Relocation Media Tem
24 April 2010