The Treasury released the exposure draft of legislation designed to tighten foreign investment rules, including those relating to residential real estate. This follows on from the announcement on 2 May 2015, when the Government announced a package of reforms to strengthen the foreign investment framework, including:
- stronger enforcement of the foreign investment rules by transferring all of the residential real estate functions to the Australian Taxation Office;
- stricter penalties that will make it easier to pursue court action and ensure that foreign investors are not able to profit from breaking the rules;
- application fees to improve service delivery and ensure that Australian taxpayers no longer have to fund the cost of administering the system;
- increased scrutiny around foreign investment in agriculture;
- increased transparency on the levels of foreign ownership in Australia through a land register; and
- a more modern and simpler foreign investment framework.
These reforms will be given effect by the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, the Register of Foreign Ownership of Agricultural Land Bill 2015 and the Foreign Acquisitions and Takeovers Fees Imposition Bill 2015.
The Government is now seeking input from stakeholders on the two substantive Bills (the Fees Imposition Bill is a standard tax imposition Bill) and their explanatory materials.
The Government has also released draft Foreign Acquisitions and Takeovers Regulations 2015 so that stakeholders understand how the new legislative framework will operate (the Regulations contain key provisions such as the definition of agribusiness, definitions and rules around foreign government investors and the specific rules for free trade agreement partner countries).
Closing date for submissions is Friday, 17 July 2015.
