The Australian Government will introduce tough new penalties for foreign property investors who purchase property in Australia without proper approvals.

Prime Minister Tony Abbott announced new reforms to foreign investment that was “contrary to our national interest” over the weekend.

The ATO will now handle all residential real estate functions and will use its data matching systems to identify possible breaches, with the Commonwealth pursuing those foreign investors who break the rules. Australia’s foreign investment regime generally does not allow foreign investors to purchase existing residential properties.

There will now be stricter penalties to make it easier to pursue foreign investors who breach the rules. Criminal penalties will be increased to $127,500 or three years imprisonment for individuals and to $637,500 for companies.

Divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches.

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