Introduction to Foreign Investment in Australia
In Australia, foreign investment is generally encouraged, but approval is required for a Foreign Person who is planning to invest in assets in Australia. Foreign investment is regulated by a framework which includes:
• the Foreign Acquisitions and Takeovers Act 1975 Cth
• the Foreign Acquisitions and Takeovers Regulation 2015 Cth
• the Federal Government’s Foreign Investment Policy
The Australian Taxation Office (ATO) Foreign Investment Review Board (FIRB) is responsible for examining and assessing all foreign investment applications.
This article details the key concepts and procedures for foreign investment in residential assets.
Who is a Foreign Person?
For the purposes of Foreign Investment Review Board approval, a Foreign Person means:
• An individual whose presence in Australia is limited as to time imposed by law.
• A foreign government or foreign government investor.
• A corporation or a general partner of a limited partnership in which a Foreign Person holds a substantial interest, or two or more Foreign Persons hold an aggregate substantial interest.
• A trustee of a trust in which a Foreign Person and their associates hold a substantial beneficial interest, or two or more Foreign Persons hold an aggregate substantial interest in the trust.
What residential properties can be purchased with FIRB approval?
Foreign investors can purchase a new or near-new dwelling, an off-the-plan property, vacant residential land, or an established dwelling.
Foreign investors can only acquire an established property if they hold a temporary visa that is longer than 12 months, and if it will be used as the principal place of residence. They cannot rent out any part of the property and must sell the property within 6 months from their visa expiration.
Application and Time Frame
Foreign investors can apply for Foreign Investment Review Board approval after they enter into a Contract subject to FIRB Approval.
If they don’t have a specific property they are planning to purchase, they can apply for an exemption certificate which allows them to make offers on multiple properties. However, foreign investors can only purchase one property under the exemption certificate. The exemption certificate will be valid for 12 months from the date of approval.
The processing time for a FIRB Application is 30 days.
Joint Tenants & Tenants in Common
Foreign investors can add partners into the application if intending to hold the property as joint tenants. The fee payable for interest is equal to the percentage of ownership in the property. Joint tenants hold the property jointly with equal rights. Joint tenancy comes with the right of survivorship, meaning that when one of the joint tenants die, the deceased’s interest will pass to the surviving joint tenant.
If both parties wish to hold the property as tenants in common, both parties need to apply. Tenants in common can hold either equal, or different shares of the property, and there is no automatic right of survivorship.
Fees
The Application fees vary depend on the type of property you are purchasing and the property price.
From 9 April 2024 to 30 June 2024, the application fee for acquisitions in new or near-new residential property or vacant residential land less than 1 million is $14,100.
The current application fee for established residential property is more expensive, which is $42,300 for property less than 1 million.
Application fees will be increased from 1 July 2024.
For more information on FIRB Application fees, please check: https://www.ato.gov.au/individuals-and-families/investments-and-assets/foreign-investment-in-australia/fees-for-foreign-residential-investors
Asset Registration
After the property has been transferred to the foreign investor, they need to register the asset using Online Services for foreign investors. The asset must be registered within 30 days from the Settlement Date.
