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Foreign buyers to pay for FIRB approval

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The Federal Government has proposed introducing new laws which

  • charge fees of at least $5,000 for foreign buyers of Australian residential real estate under $1m. Anything over $1m will incur an additional $10,000 fee for every extra million dollars in the purchase price. 
  • introduce a new register set up to monitor foreign residential and agricultural property owners in Australia and local 
  • introduce enforcement policies and a fine of up to $42,500 for individuals who help a foreign buyer breach the rules, which could catch out people such as real estate agents, conveyancers and local family members who assist unlawful purchases.

The fees outlined by the Government are much higher than those recommended in a report by the House of Representatives Economics Committee, which suggested an administrative charge of up to $1,500, with the money raised to fund the Foreign Investment Review Board (FIRB).

The Treasurer also said that businesses applying for FIRB approval to acquire Australian companies worth more than $1 billion would face an application fee of $100,000, while other applications to buy businesses would attract a $25,000 fee.

This represents a clear shift in Australian foreign investment policy and follows the restrictions on foreign buyers claiming the CGT discount since 29 June 2013. Has the Abbott Government abandoned its election campaign slogan of “we are open for business” ?

Will Australia continue to be competitive on a global scale for foreign investors given it already has such a reputation of red-tape?

No doubt, a careful review of the proposed laws will be required and may lead to more sophisticated and necessary structures to be in place for foreign investors.

 

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