On 6 February 2017, the Treasurer, the Hon Scott Morrison, announced that, in the last 6 months, he had ordered the sale of a further 15 Australian residential properties—purchased by foreign nationals in breach of Australia’s foreign investment rules.
Since 2013, the Government has issued a total of 61 forced sale orders, with a combined value of A$107million; most notably in March 2015, when the Treasurer ordered a Hong Kong billionaire to sell his A$39million Point Piper harbour side mansion in Sydney. Properties with values as low as A$140,000 have also been the subject of forced sale orders.
Regardless of value, a foreign person generally needs to notify the Foreign Investment Review Board (FIRB), and obtain prior approval, before acquiring residential land, vacant land and shares or units in urban land companies or trusts.
As part of an effort to increase compliance, FIRB’s responsibilities for residential real estate were referred to the Australian Taxation Office (ATO) in May 2015. FIRB’s enforcement and compliance powers were also substantially bolstered.
Using information provided by the public—as well as advanced data-matching capabilities—the ATO has detected over 570 foreign national who have not complied with the foreign investment rules. That has resulted in forced sales, self-disposals, variations to previously-approved FIRB applications, civil penalties and criminal prosecutions.
In short, the FIRB has been reinvigorated and foreign nationals who have breached the rules are being seriously pursued!
The foreign investment rules are complex. If you are a foreign national wanting to invest in Australian residential or commercial property, you need to be aware of your obligations. The financial sanctions and criminal penalties for non-compliance are significant; and the government is monitoring foreign investment closely.
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.
