6 things you should know about the new FIRB reformsOn 20 August 2015 the Australian Federal Government (Government) introduced legislation into parliament that significantly reforms the Foreign Acquisition and Takeovers Act 1975 (Cth) (Act), the legislation regulating foreign investment in Australia.
The new legislation, referred to as the ‘Foreign Investment Reform Package’, comprises of the:•Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015•Register of Foreign Ownership of Agricultural Land Bill 2015•Foreign Acquisitions and Takeovers Fee Imposition Bill 2015.We list 6 things that you should know about the ‘Foreign Investment Reform Package’ in Annexure A below.An ‘administration fee’ will be payable by all foreign persons applying to the Foreign Investment Review Board (FIRB) for approval to purchase Australian real estate. There will also be an ‘administration fee’ payable by developers when applying for an advance off-the plan approval. The Government intends for this regime to be effective as of 1 December 2015.The fee will be calculated by reference to the value of the property being purchased as shown in Annexure A below.A new regime of civil penalties will be introduced and the existing criminal penalty regime will be expanded. The maximum criminal penalties will be increased to $127,500 for individuals and $637,000 for companies and include up to three years imprisonment. These criminal penalties will extend to developers with advance off-the-plan approvals who fail to advertise new dwellings in Australia in accordance with the conditions of their approval.Civil penalties include penalties for foreign persons who fail to notify FIRB about the acquisition of an existing dwelling, or who don’t comply with a condition of the acquisition. These penalties will be calculated on the greater of:•the amount of capital gain;•25% of the purchase price; or•25% of the market value of the property.These penalties potentially extend to third parties who assist a foreign person to breach the Act. This may change how developers and real estate agents need to interact with prospective foreign person purchasers, particularly in the fast-paced environment of residential sales. A new unit within the ATO will be established to monitor compliance and enforce the penalty regime. The Government believes that the ATO is well placed to carry out this role due to its sophisticated data matching systems, which can draw on land titles data from the States and Territories, immigration movement and taxpayer data.On 1 July 2015 the ATO established a register relating to foreign ownership of agricultural land. The ATO intends to establish a register relating to foreign ownership of residential real estate on 1 July 2016.Abolishing the $5 million threshold Under the current framework, commercial developed property that is heritage listed is subject to a lower non-indexed threshold of $5 million. This threshold was a historical requirement which existed prior to the introduction of Commonwealth and State legislation which imposed tighter regimes on heritage listed property.The ‘Foreign Investment Reform Package’ will abolish this lower threshold and allows the $55 million threshold to apply to heritage listed developed commercial real estate. Definition of “substantial interest”Under the current framework, a foreign person is deemed to hold a ‘substantial interest’ in a company if the foreign person controls 15 percent or more of voting power in that company or holds 15 percent or more of the shares in that company. This 15 percent threshold is currently inconsistent with the Government’s takeover rules, contained in the Corporations Act 2001 (Cth), which considers a change of control to occur when a 20 percent threshold is reached. The ‘Foreign Investment Reform Package’ amends the definition of’ substantial interest’ so that the definition is consistent with the Corporations Act 2001 (Cth). The ATO and the Government have announced a reduced penalty period for foreign persons who voluntarily inform the ATO of breaches of the foreign investment rules for residential real estate. This period ends on 30 November 2015. Investors who voluntarily disclose may:•be given 12 months to divest the asset rather than a shorter period determined by the Treasurer•not be referred to the Commonwealth Director of Public Prosecutors for criminal prosecutions.This offer is not available to people involved in current ATO/FIRB investigations.The information in this Article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 【We provide excellent expert advice to businesses wishing to invest in Australia.】Our previous news releases for Chinese investors include the following topics:
- Business set up in Australia, business structures, company administration, etc.
- Background information of Australia, including Australian government, legal system, and business structures, etc.
- Laws and regulations in various common areas, including protection of technology and intellectual property, anti-trust and consumer law, contract law, business migration, real property, public takeovers, and electronic commerce etc.
- Professional industrial updates and insights, such as regulation on foreign investment.
【政策】ASIC发布新法信息指南,将公平合同条款保护扩展至小企业合同 
The Crowdfunding Bill: changing equity financing for start-ups 
