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JOINT PRESS RELEASE

THE HON. TONY ABBOTT MP, PRIME MINISTER


THE HON. JOE HOCKEY MP, TREASURER
GOVERNMENT STRENGTHENS THE FOREIGN INVESTMENT FRAMEWORK
The Commonwealth Government is taking action to strengthen the integrity of the foreign investment
framework.
Foreign investment is integral to Australias economy and we welcome all investment that is not contrary to
our national interest.
After extensive consultations on our Options Paper, we are announcing important reforms to foreign
investment that will help to demonstrate that it is for our countrys benefit.
We will ensure stronger enforcement of new and existing foreign investment rules by transferring all
residential real estate functions to the Australian Taxation Office.
The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will
pursue those foreign investors who break the rules.
Australias foreign investment regime generally does not allow foreign investors to purchase existing
residential properties.
There will now be stricter penalties to make it easier to pursue foreign investors who breach the rules.
Criminal penalties will be increased to $127,500 or three years imprisonment for individuals and to
$637,500 for companies.
Divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less
serious breaches.
The Government will also ensure that people who break the rules do not profit by introducing a civil penalty
to capture any capital gain made on divestment of a property.
Third parties who knowingly assist a foreign investor to breach the rules will also now be subject to civil
and criminal penalties, including fines of $42,500 for individuals and $212,500 for companies.
Australian taxpayers will no longer foot the bill for screening foreign investment application applications.
Fees will be levied on all foreign investment applications. For residential properties valued at $1 million or
less, foreign investors will pay a fee of $5,000. Higher fees will apply to more expensive residential
properties as well as business, agriculture and commercial real estate applications.
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Australias foreign investment policy for residential real estate is designed to increase Australias housing
stock, but lack of enforcement over recent years has threatened the integrity of the framework.
We will enforce the rules, ensuring that all foreign investors follow the rules and dont profit from breaking
them.
The Government will introduce legislation into Parliament in the Spring Sittings to ensure that the reforms
will commence on 1 December 2015.
There will also be increased scrutiny around foreign investment in agriculture and increased transparency on
the levels of foreign ownership in Australia through a comprehensive land register.
Further information on the agricultural changes, fees and the penalty regime is attached.

2 May 2015

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OVERVIEW OF THE REFORM PACKAGE


1.

Stronger enforcement of the existing foreign investment rules by transferring all of the
residential real estate functions to the Australian Taxation Office (between now and
1 December 2015). The Australian Taxation Office will improve compliance and
enforcement through sophisticated data-matching systems and specialised staff with
compliance expertise.

2.

Stricter penalties that will make it easier to pursue foreign investors that breach the
rules.

The existing criminal penalties (which will be increased from $85,000 to $127,500
for individuals) and divestment orders will be supplemented by civil pecuniary
penalties and infringement notices for less serious breaches of the residential real
estate rules.

Third parties who knowingly assist a foreign investor to breach the rules will also
now be subject to civil and criminal penalties.

3.

Application fees to ensure that Australian taxpayers no longer have to fund the cost of
administering the screening of foreign investment applications.

4.

Increased scrutiny around foreign investment in agriculture.

5.

6.

From 1 March 2015, the screening threshold for agricultural land was lowered from
$252 million to $15 million (cumulative).

From 1 December 2015, a $55 million threshold (based on the value of the
investment) for investments in agribusiness will be introduced.

Increased transparency on the levels of foreign ownership in Australia through a


comprehensive land register.

An agricultural land register with information provided directly to the Australian


Taxation Office by investors will be established from 1 July 2015.

The Government is in negotiations with the states and territories to use their land
titles data to expand the register to include all land (including residential real
estate).

A more modern and simpler foreign investment framework.

The Government will undertake further consultation on options to simplify the


system.

NEW PENALTY REGIME


Penalties for breaches of rules which apply to residential real estate
Breach of current rule

Proposed new penalties

Foreign person acquires new


property without approval
(approval would normally have
been granted)

Increased Criminal Penalty

Temporary resident acquires


established property without
approval
(approval would normally have
been granted)

Maximum criminal penalty of


Individual 750 penalty units ($127,500) or 3 years imprisonment.
Company 3,750 penalty units ($637,500).
Civil Penalty
Maximum civil penalty is the greater of the following:
10 per cent of purchase price in addition to the relevant application
fee; or
10 per cent of market value of the property in addition to the relevant
application fee.
Tier 1 Infringement notice Voluntary complied by coming
forward
Individual 12 penalty units ($2,040) plus the relevant application fee.
Company 60 penalty units ($10,200) plus the relevant application fee.
Tier 2 Infringement notice Identified through compliance
activities
Individual 60 penalty units ($10,200) plus the relevant application fee.
Company 300 penalty units ($51,000) plus the relevant application
fee.
Either an infringement notice or civil penalty would be sought but not
both.

Non-resident acquires established


property or temporary resident
acquires more than
one established property
(not normally approved)
Temporary resident fails to sell
established property when it
ceases to be their principal
residence
(breach of conditional approval)
Temporary resident rents out an
established property
(breach of conditional approval)
Failure to begin construction
within 24 months without seeking
extension
(breach of conditional approval of
vacant land/ redevelopment
applications)

Increased Criminal Penalty

Developer fails to market


apartments in Australia
(breach of advanced-off-the-plan
certificate)

Criminal Penalty

Maximum criminal penalty of


Individual 750 penalty units ($127,500) or 3 years imprisonment.
Company 3,750 penalty units ($637,500).
Civil Penalty
Maximum civil penalty is the greater of the following:
the capital gain made on divestment of the property;
25 per cent of purchase price; or
25 per cent of market value of the property.

Maximum criminal penalty of:


Individual 750 penalty units ($127,500) or 3 years imprisonment.
Company 3,750 penalty units ($637,500).
Civil Penalty
Maximum civil penalty of:
Individual 250 penalty units ($42,500)

Breach of current rule

Proposed new penalties

Company 1,250 penalty units ($212,500)

Property developer fails to


comply with reporting conditions
associated with approval
(breach of advanced-off-the-plan
certificate)
Foreign person fails to comply
with reporting condition which
requires them to notify of actual
purchase and sale of established
properties
(a new rule)

Civil penalty
Maximum civil penalty of:
Individual 250 penalty units ($42,500)
Company 1,250 penalty units ($212,500)
Tier 1 Infringement notice Voluntary complied by coming
forward
Individual 12 penalty units ($2,040) plus the relevant application fee.
Company 60 penalty units ($10,200) plus the relevant application fee.
Tier 2 Infringement notice Identified through compliance
activities
Individual 60 penalty units ($10,200) plus the relevant application fee.
Company 300 penalty units ($51,000) plus the relevant application
fee.
Either an infringement notice or civil penalty would be sought but not
both.

Third party assists foreign


investor to breach rules

Civil penalty
Maximum civil penalty, the same as the primary breach, of:
Individual 250 penalty units ($42,500)
Company 1,250 penalty units ($212,500)
Criminal Penalty
Knowingly assisting another person to commit a criminal offence is an
offence under Section 11.2 of the Criminal Code (maximum penalty is
the same as the primary offence).

Penalties for breaches of rules which apply to the business and agriculture investments
Foreign person makes an
acquisition without approval
(approval would normally have been
granted)

Increased Criminal Penalty

Foreign person fails to comply


with a condition of approval

Increased Criminal Penalty

Third party assists foreign


investor to breach rules

There is currently no civil pecuniary penalty under the Act for knowingly
assisting breaches of the Act.
Civil penalty
Maximum civil penalty, the same as the primary breach, of:
Individual 250 penalty units ($42,500)
Company 1,250 penalty units ($212,500)
Criminal Penalty

Maximum criminal penalty of


Individual 750 penalty units ($127,500) or 3 years imprisonment.
Company 3,750 penalty units ($637,500).
Civil penalty
Maximum civil penalty of:
Individual 250 penalty units ($42,500)
Company 1,250 penalty units ($212,500)

Maximum criminal penalty of


Individual 750 penalty units ($127,500) or 3 years imprisonment.
Company 3,750 penalty units ($637,500).
Civil penalty
Maximum civil penalty of:
Individual 250 penalty units ($42,500)
Company 1,250 penalty units ($212,500)

Knowingly assisting another person to commit a criminal offence is an


offence under Section 11.2 of the Criminal Code (maximum penalty is the
same as the primary offence).

FOREIGN INVESTMENT THRESHOLD CHANGES AND APPLICATION FEES


Real estate investments
Type of investor

All investors
(unless exempt)

Type of acquisition

Previous threshold

New threshold

Application Fee from


1 December 20151

Residential properties
valued at $1 million or
less

$0

$0

$5,000

Residential properties
valued at greater than
$1 million

$0

$0

$10,000 (then $10,000


incremental fee increase
per additional $1 million
in property value)

Advanced off-the-plan
certificates

$0

$0

$25,000 upfront, with a


six monthly
reconciliation of
properties sold to foreign
persons based on rates
above

Annual Programs

$0

$0

$25,000 (or $100,000


where proposed
investment is greater
than $1 billion)

Investment in the business, commercial real estate and agriculture sectors


Type of investor

Type of acquisition

Previous
threshold

New threshold

Application Fee from


1 December 20151

Privately owned
investors from
FTA partner
countries that
have the higher
threshold

Developed commercial
real estate (including
heritage-listed
properties)2

$1,094 million
(indexed annually)

$1,094 million
(indexed annually)

$25,000

Vacant commercial
land

$0

$0

$10,000

Business acquisitions
in non-sensitive
sectors2

$1,094 million
(indexed annually)

$1,094 million
(indexed annually)

$25,000 (or $100,000 for


business acquisitions
where the value of the
transaction is greater
than $1 billion)
$10,000 if an internal
reorganisation

Business acquisitions
in sensitive sectors3

$252 million
(indexed annually)

$252 million
(indexed annually)

$25,000 (or $100,000 for


business acquisitions

Application fees are indexed by the consumer price index on 1 July annually.
Free Trade Agreement partner countries the higher threshold currently applies to investors from the
US, NZ, Japan, Korea and Chile. It will also apply to Chinese investors once the China-Australia free trade
agreement enters-into-force.
2

Type of investor

Type of acquisition

Previous
threshold

New threshold

Application Fee from


1 December 20151
where the value of the
transaction is greater
than $1 billion)
$10,000 if an internal
reorganisation

Rural land

$1,094 million
(indexed annually)

$1,094 million
(indexed annually)
for US, NZ and
Chile.
$15 million
(cumulative) for
China, Japan and
Korea.4

Rural land less than


$1 million: $5,000
Rural land equal to or
greater than $1 million:
$10,000, (then $10,000
incremental fee per
additional $1 million in
rural land value, capped
at $100,000)

Agribusinesses

$1,094 million
(indexed annually)

$1,094 million
(indexed annually)
for US, NZ and
Chile.
$55 million
(indexed annually)
for China, Japan and
Korea.5

$25,000 (or $100,000 for


agribusiness acquisitions
where the value of the
transaction is greater
than $1 billion)

Type of investor

Type of acquisition

Previous
threshold

New threshold

Application Fee from


1 December 20156

Privately owned
investors from
non-FTA
countries and
FTA countries
that do not have
the higher
threshold

Developed commercial
real estate

$55 million (indexed


annually)

$55 million
(indexed annually)

$25,000

Heritage-listed
developed commercial
real estate

$5 million

$5 million

$25,000

Vacant commercial
land

$0

$0

$10,000

Business acquisitions
in (sensitive and
non-sensitive sectors)

$252 million
(indexed annually)

$252 million
(indexed annually)

$25,000 (or $100,000 for


business acquisitions
where the value of the
transaction is greater
than $1 billion)
$10,000 if an internal
reorganisation

The prescribed sensitive sectors (where the higher screening threshold does not apply) are: media;
telecommunications; transport; defence and military related industries; and the extraction of uranium or plutonium
or the operation of nuclear facilities.
4
The $15 million cumulative threshold took effect on 1 March 2015.
5
The $55 million threshold will take effect from 1 December 2015.
6
Application fees will be indexed by the consumer price index on 1 July each year.

Type of investor

Type of acquisition

Previous
threshold

New threshold

Application Fee from


1 December 20151

Rural land

$252 million
(indexed annually)

$15 million
(cumulative)4

Rural land less than


$1 million: $5,000

$50 million for


Singapore and
Thailand7

Foreign
Government
Investors

Rural land equal to or


greater than $1 million:
$10,000, (then $10,000
incremental fee per
additional $1 million in
rural land value, capped
at $100,000)

Agribusinesses

$252 million
(indexed annually)

$55 million
(indexed annually)5

$25,000 (or $100,000 for


agribusiness acquisitions
where the value of the
transaction is greater
than $1 billion)

All direct investments


(regardless of the
sector)

$0

$0

Based on the applicable


fee above.

New business
proposals

$0

$0

$10,000

Interests in land
(including rural land)

$0

$0

Based on the applicable


fee above.

Consistent with the commitments in the Singapore and Thailand free trade agreements.

AGRICULTURAL INVESTMENTS
Scope of agribusiness
definition

The proposed definition of agribusiness for the $55 million


screening threshold will include primary production businesses
(generally those within Division A of the Australian and New
Zealand Standard Industrial Classification Codes) and certain
first stage downstream manufacturing businesses (including
meat, poultry, seafood, dairy, fruit and vegetable processing and
sugar, grain and oil and fat manufacturing).

Agricultural land definition

The lower $15 million cumulative screening threshold for


agricultural land was implemented on 1 March 2015 through
Australias Foreign Investment Policy. While the existing
concept of rural land has been temporarily employed to give
effect to the lower threshold, it does not adequately reflect a
common understanding of agricultural land.
The Government will introduce a clearer definition that better
captures productive agricultural land. Agricultural land will be
defined as land used, or that could reasonably be used, for a
primary production business (primary production business is
defined under the Income Tax Assessment Act 1997).

Foreign ownership register

Consistent with the Governments 11 February 2015 press


release, the ATO will commence collecting agricultural land data
on 1 July 2015. The changes will initially occur through changes
to Australias Foreign Investment Policy, with supporting
legislation to be introduced by 1 December 2015 (aligning with
the rest of the reform package). The stocktake will occur
between 1 July 2015 and 31 December 2015, with aggregate data
published in the first half of 2016.