Substantial fees will now be imposed on foreign persons, who are required to obtain approval from FIRB before acquiring of an interest in agricultural land. Foreign persons must register interests in agricultural land on the Land Register, as administered by the ATO.
Australia’s foreign investment framework – agricultural land
In 2015 there were substantial changes to the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Foreign Acquisitions and Takeovers Regulations 1989 (Cth) (Law). These legislative changes overhauled the foreign investment framework in Australia, including for agricultural land.
Despite being in effect for a number of months there are continuing developments to the framework. Individuals and organisations must remain conscious of their ongoing responsibilities when dealing with agricultural land.
Approval for agricultural land investments
Foreign persons are now required to obtain approval from the Foreign Investment Review Board (FIRB) for the acquisition of an interest in agricultural land, and pay the associated fees.
Approval to acquire an interest in agricultural land is required from FIRB, where the cumulative value of the agricultural land, owned by a foreign person is $15 million or more. There some exceptions to this obligation, including for investors from Australia’s trade agreement partner countries and for some categories of land.
From 1 December 2015 significant fees apply, in accordance with the Foreign Acquisitions and Takeover Fee Imposition Act 2015 (Cth), for approval of investment in agricultural land. The approval requirement applies not only to freehold interests in agricultural land, but also
rights to occupy agricultural land under a lease or licence where the term exceeds or is likely to exceed five years (including possible extension or renewals). An application will not be considered, until the fee has been paid.
The fees payable for an application to FIRB are based on the value of the interest. For a freehold interest, fees will generally be based on the consideration to be paid. For leasehold interests, the value will ordinarily be the total of any:
- upfront initial payments for the grant of the leasehold interest;
- periodic payments for the benefit and enjoyment of the land; and
- amounts likely to be paid for an extension or renewal of the lease.
Fees – July 2016
The fees for approval to acquire an interest in agricultural land were updated in July 2016. These fees may have significant impacts on organisations (or individuals) that fall within the definition of a foreign person, as the fees can be in excess of $100,000. The current fees are set out below.
| Action Type | Fee Payable |
|---|---|
| Acquiring an interest in agricultural land where the price of the acquisition is $1 million or less ($0 - $1,000,000) | $5,000 |
| Acquiring an interest in agricultural land where the price of the acquisition is more than $1 million and less than $2 million ($1,000,001 - $1,999,999) | $10,100 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $2 million and less than $3 million ($2,000,000 - $2,999,999) | $20,300 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $3 million and less than $4 million ($3,000,000 - $3,999,999) | $30,400 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $4 million and less than $5 million ($4,000,000 - $4,999,999) | $40,600 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $5 million and less than $6 million ($5,000,000 - $5,999,999) | $50,700 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $6 million and less than $7 million ($6,000,000 - $6,999,999) | $60,900 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $7 million and less than $8 million ($7,000,000 - $7,999,999) | $71,000 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $8 million and less than $9 million ($8,000,000 - $8,999,999) | $81,200 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $9 million and less than $10 million ($9,000,000 - $9,999,999) | $91,300 |
| Acquiring an interest in agricultural land where the price of the acquisition is between $10 million or more ($10,000,000 or more) | $101,500 |
Particularly given the cap and approach to ascribing value, it will be critical to approach relevant transactions in a structured, effective manner.
Land Register
As previously advised, foreign investors must use the land register (Land Register), administered by the Australian Taxation Office (ATO), to register agricultural land purchases in Australia. All existing and relevant interests in agricultural land were required to be registered with the ATO by 29 February 2016.
From 1 February 2016, foreign persons are now required to notify the ATO within 30 days, of any newly acquired interests or changes to interests in agricultural land, in accordance with the Register of Foreign Ownership of Agricultural Land Act 2015 (Cth). There is no cost for registering interests on the Land Register.
Foreign persons must inform the ATO within 30 days if a foreign person:
- acquires any further interests in agricultural land;
- ceases to have an interest in agricultural land (as previously disclosed);
- ceases to be a foreign person; or
- there is a change in the land type.
The ATO require notification for all acquisitions of interests in agricultural land, even those which do not need to be approved by FIRB.
Offences and penalties
The legislative amendments introduced significant civil penalties for breaches of the foreign investment rules. Foreign persons with interests in agricultural land should pay careful attention to their obligations to ensure they do not fall foul of such provisions.
This Alert is intended as an alert only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.
