Australia to relax foreign investment rules
Monday, 20 March, 2017
Australia's federal government has published draft laws seeking to remedy some of the unintended consequences of the new foreign investment restrictions introduced at the end of 2015.
The December 2015 legislation introduced stricter and more flexible penalties for unlawful purchases by foreign investors; substantial fees for registering purchases; tightening of rules relating to certain sectors such as agriculture and critical infrastructure; and a register for foreign-held interests in agricultural land, later expanded to include foreign-owned water entitlements.
Foreign persons needed to apply for foreign investment approval before purchasing residential land in Australia, although exemption certificates are available in some cases.
The new proposals – the Foreign Investment Framework 2017 Legislative Package Consultation Paper – released on 8 March 2017, ease some of these measures. Their justification is that the 2015 regime is 'perceived to be diverting screening resources from more sensitive cases'.
In particular, the exemption certificate regime will be extended to new dwellings and vacant residential land, treating them on par with existing dwellings and off-the-plan developments. They will also apply to failed off-the-plan acquisitions, allowing developers to sell dwellings to foreign persons where the dwelling has been the subject of a failed settlement.
The rules on acquisition of commercial residential property and 'non-sensitive' commercial land are also to be relaxed.
The government further concedes that the fee structure for commercial transactions is unnecessarily complex, with different fees for different acquisition types, and some fees tiered on a sliding scale based on consideration. Proposals to address these issues include changing the whole fee structure to a flat sliding or tiered fee structure, giving a smaller range of possible fees; and/or giving legislative effect to a discretionary fee waiver for small non-land acquisitions valued under AUD10 million, as well as certain other investments.
The proposals are expected to be welcomed by foreign investors, says law firm Clifford Chance.
Interested parties can provide feedback by 29 March.