What you need to know about the new Australian government’s foreign investment regulations
What you should know about Australian foreign investment restrictions: A recap.
A recap of what’s changed in the last few weeks.
A summary of what happened on the same day in December 2017 when the Federal Government announced new rules to make foreign investment into Australia easier.
A rundown of the government’s proposed changes to foreign investment rules.
A timeline of what Australia’s foreign investments are now subject to, how they’ll change and what they mean for your portfolio.
What we know about foreign investment in Australia now: The foreign investment regime introduced in December last year gives foreign investors the right to purchase Australian property for as little as $5 million.
However, it’s not clear what that means in practice.
The new rules give foreign investors greater protections against “unfair or misleading” foreign investment practices, but they also open the door to greater abuses of foreign investors by governments, businesses and non-governmental organisations.
Under the Foreign Investment Promotion and Protection Act (FIPPA), foreign investors can invest up to $10 million in Australian residential real estate if they’re investing “in good faith” for a “commercial purpose”.
This means they must also demonstrate they’ve been “reasonably assessed” to be in the business of providing a “compelling commercial purpose” to their foreign investors, and are in a position to “establish, operate and maintain an office or other place of business”.
The legislation also makes it an offence for any foreign investor to engage in “an unlawful conduct that is likely to cause a loss of a commercial benefit”.
A new $5m limitOn the same evening that the government announced the new foreign investment limits, it also announced that it would impose a $5.5 million foreign investment limit on foreign buyers of Australian residential property.
The new limit applies to investors with a capital of $10m or more.
The government said the move was aimed at protecting investors’ investment rights by requiring foreign investors to show “a reasonable basis for the purpose of investing in Australia” if they want to buy property.
The $5M limit is the same as the $5 billion limit that the Australian Competition and Consumer Commission (ACCC) has set for Australian residential investors.
It’s unclear whether the new limit will have any effect on foreign investors who want to invest in Australian real estate.
A new crackdown on foreign investmentIt’s also unclear whether foreign investors will be able to use the new $10,000 limit to invest overseas.
A spokesman for the Department of Foreign Affairs and Trade said the $10M limit applies only to “investments in Australia that are commercial in nature”.
“Foreign investors may not invest in property in Australia without first establishing a reasonable basis to do so,” the spokesman said.
Foreign investors can still invest in a property if they meet certain conditions, including being a “good faith” investor, making sure they have “a legitimate business purpose”, having “reasonable means” to acquire the property and not being a person who “controls” it.
The spokesman said the foreign investment laws were intended to protect investors’ rights and freedoms, but “there will be exceptions”.
The Australian Competition & Consumer Commission is still reviewing the new restrictions and the government will consider them again in coming weeks.
The new limits will apply to a broader range of real estate transactions than previously, including a “strategic foreign investor” who’s acquiring a property in an area where the government believes “there is a significant and imminent threat of substantial harm to public health or safety”.
Foreign investment is currently limited to property that has a value of more than $10million.
The limits will be applied to a wider range of transactions, including foreign investors acquiring a foreign property with a value above $10.5m, foreign investors investing in a “domestic” property, foreign buyers purchasing a property for their family or a company or foreign investors purchasing a “substantial” property.
Australia is one of only two countries that have no foreign investment restriction on their property laws.
In other news, we’ve got a brand new report from ABC’s The Drum that details the Australian Government’s controversial new laws on foreign ownership.
Read more about the ABC’s new foreign ownership rules: