New laws regulating foreign investment in Australia have been introduced to Parliament by Treasurer Joe Hockey.
The Foreign Acquisitions and Takeovers Legislation Amendment Bill grants more power to the Australian Tax Office (ATO), the Foreign Investment Review Board (FIRB) and the government when it comes to enforcing foreign investor rules.
Three will be a “self-report” period between now and November 30, where those in breach of the investment rules can receive a reduced penalty. The new reforms should come into play from December 1.
As a result of self-reporting, Hockey has issued 7 divestment orders for six illegally-held properties.
Hockey says there will be increased scrutiny around foreign investment in both agriculture and residential real estate.
From December there will be a $55 million threshold for direct interests in agribusinesses.
Since March the screening threshold for foreign purchases of agricultural land has been lowered from $252 million to $15 million based on the cumulative value of agricultural land owned by that investor.
“Australians can have confidence that investments into agriculture will be scrutinised to ensure that they are not contrary to the national interest,” Hockey said.
Under the new legislation, criminal penalties will be increased to $135,000 from $90,000 for individuals and will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches of the residential real estate rules.
Knowingly assisting a foreign investor breach the rules could also open third parties such as real estate agents, migration agents, conveyancers and lawyers up to both civil and criminal penalties.
Investors acquiring a stake of less than 20% will no longer need foreign investment approval. The substantial interest threshold was previously 15%.
Hockey has also allocated $47.5 million over four years to the ATO to fund compliance and enforcement of the new rules.
“The ATO has the capacity to cover more than 600 million transactions annually through its sophisticated data matching programs,” Hockey said.
The bill also transfers the cost of enforcing foreign investors away from taxpayers by charging a fee of $5,000 for residential or agricultural deals valued below $1 million. Higher fees will apply to more expensive residential and agricultural properties as well as commercial real estate and business applications.
In July the government established a register of foreign ownership of agricultural land. All existing holdings must be registered with the ATO by the end of the year and any new interests registered within 30 days.
The federal government is also working with the states and territories to use their land titles data to expand the register in the future.