The framework of foreign investment in Australia has a number of touch points, before, during and after the investment process.
Roles in the administration of Australia’s foreign investment policies are shared between the Foreign Investment Review Board (“FIRB”) and the Australian Taxation Office (“ATO”).
Higher foreign investment fees for housing
The Australian Government has announced changes to its foreign investment policy in order to increase the availability of homes for Australian residents.
Under the revised policy, fees for foreign investment in existing Australian homes will be tripled, and penalties for leaving these properties vacant will be doubled. This applies to foreign-owned dwellings that were purchased after May 9, 2017.
To encourage the development of new residential properties, the government will decrease application fees for foreign investments in Build to Rent projects.
These revised fees and regulations for Build to Rent projects will come into effect on December 14, 2023.
Information and compliance resources for foreign investors in Australian residential property is available here.
FIRB Application Fees
FIRB fees are indexed each financial year (from 1 July) according to factors based on averages of the Bureau of Statistics Consumer Price Index.
In addition to the scheduled increase, with effect from 29 July 2022, FIRB fees and penalties are doubled. See Minister’s media release.
Fees are generally payable at the time an application or notice is lodged. For most applications, the statutory timeframe of 30 days for making a decision on an application or notification will not start until the correct fee has been paid.
The calculation of Foreign Investment Review Board current fees is contained in a Guidance Note document which can be downloaded here.
Foreign Investment Review Board
A fresh set of regulations for the oversight of foreign investments came into effect on 1 January 2021. See:
- Significant Changes to Australia’s Foreign Investment Framework Commenced on 1 January 2021 – Jones Day
- Foreign Investment Review Board Guidance Notes – FIRB
- see also Foreign acquisition of residential land: a quick guide (Feb 24, 2023)
New Investment Engagement Service (NIES) for businesses planning significant new investments in Australia.
Provided by the Australian Taxation Office from 1 July 2021, the service consists of providing fast tailored tax advice to businesses through contact with ATO specialists “prior to the execution of significant commercial transactions”.
See details of the “New Investment Engagement Service“.
Australian Taxation Office
In addition to tax administration, the ATO manages
- Residential investment applications
- The Land and Water registers
- Vacancy fee for foreign owners of residential dwellings not residentially occupied or rented out for more than 183 days (six months) in a year.
For information and forms, see:
Foreign Interests Transparency Scheme
A registration (“transparency”) scheme is in place in respect of those acting on behalf of foreign governments or political bodies. This scheme is being administered by the Attorney-General’s Department.
The Foreign Influence Transparency Scheme commenced on 10 December 2018.
People or entities acting for or on behalf of certain foreign principals* are required to register and disclose their relationships and activities.
The scheme is being administered by the Federal Attorney General’s department.
*A foreign principal is any of the following:
- A foreign government
- A foreign political organisation
- A foreign government related entity
- A foreign government related individual
See further:
- View the public register
- Attorney-General’s Department – Transparency
- Registration Portal
- Article: Australia’s new foreign-influence laws: Who is targeted?
- Legislation: Foreign Influence Transparency Scheme Act 2018
Tax Residence of Foreign Companies
Practical Compliance Guideline PCG 2018/9 provides guidance for determining the tax residence of foreign companies according to the central management and control test.
See also: Taxation Ruling TR 2018/5 Income tax: central management and control test of residency
and Guidance For Multinationals
- Taxation Determination TD 2018/12 – The purpose of section 177DA is to ensure that foreign multinational entities cannot avoid the attribution of business profits to Australia, by avoiding a taxable presence in Australia.
- Recent Developments in Transfer Pricing and the Taxation of Multinational Companies in Australia
- New ATO guidance on cross-border related party financing – PWC
- PCG 2017/4 ATO compliance approach to taxation issues associated with cross-border related party financing arrangements and related transactions
Tax Residence of Super Funds
The concessionary tax regime for super funds is dependent on the maintenance of Australian tax residence.
The nature of the requirements and some recent (2021-2022) changes are set out here: Super news – Important update to SMSF residency rules – BDO Australia
Annual vacancy fees for foreign owners
In a 2017 budget measure, an annual vacancy fee for foreign owners of residential real estate is to be introduced where residential property is not occupied or genuinely available on the rental market for at least 6 months in a 12 month period.
The fee applies from 7:30PM (AEST) on 9 May 2017. The fee is that which was payable at the time of the foreign investment application.
Annual returns
You must lodge your Vacancy fee return within 30 days of the end of each vacancy year.
Returns are due annually within 30 days of the anniversary of settlement for each dwelling owned.
Vacancy fee amount
The vacancy fee is equivalent to the foreign investment application fee paid at the time of application.
The Australian Tax Office administers the charge. See Annual vacancy fee
Water Register
Foreign persons are required to annually update the register of their interests in Australian water entitlements, no later than 30 days after the financial year in which the registration event occurs.
The financial year in Australia begins in 1 July and ends on 30 June of the following year. The deadline for submission is therefore 30 July each year.
Acquisitions, cessations and changes of entitlements are required to be reported.
Registration is free, and is lodged with the Australian Tax Office which provides the forms administers the Water Register and associated requirements.
There are administrative penalties for non-compliance, and potentially could negatively consideration of a Foreign Investment Review Board application.
The water register and associated obligations on foreign persons began on 1 July 2017.
What water registration information is required to be reported?
The following information (or changes thereto) is required to be included in the registration form:
- ownership details, including nationality and percentage owned
- water entitlement details, including type and entitlement number or identifier
- water resource type
- flow control (if applicable)
- volume (megalitre)
- sector and usage details
(source ato.gov.au)
What “water entitlements” are required to be registered?
‘Registrable water entitlements’ and ‘contractual water rights’ are required to be registered and are defined terms in the controlling legislation.
Typically such interests arise under state-based legislation in connection with agricultural land and mining projects.
It can be assumed generally that the Australian Tax Office has access to relevant information through data sharing arrangements with the various State offices.
Examples of registrable interests are described here.
Further information: Registration of registrable water interests for foreign investors
Registrations of Land Interests
Unlike the registration of water interests which is only required on an annual basis, a foreign person or their agent must register their agricultural land interest within 30 days of the date of their investment in Australian residential real estate or Australian agricultural land.
See details and links here (ATO)
Other Resources
This page was last modified 2023-12-12