Australia introduces stronger foreign investment rules from 1 December 2015

The Australian Government has been focusing on improving the foreign investment rules and regulations for some time now. The Government wants to ensure that any future foreign investment does not compromise national interests. With this purpose in mind, the Government has further strengthened the foreign investment rules of Australia with effect from 1 December 2015. In particular, the government has now provided stricter enforcement laws and clear guidelines for foreign investors who wish to invest in real estate or property in Australia.

Why the need for foreign investment

Foreign investment provides much-needed capital which can have a multiplier effect on the local economy. It can boost agricultural, manufacturing, employment and incomes within Australia. Without foreign investment coming in, the availability of resources will be lower, having a detrimental effect on each of these factors.

Safety in foreign investment

The government feels that foreign investment is welcome in Australia, but it has to be monitored properly to ensure that there is no security or administrative problems that come with it. Well monitored investments will have a maximum beneficial effect for Australians. The changes in these rules aim to bring more compliance on the part of the foreign investors while also ensuring that they do not face any administrative difficulties while making these investments.

The changes

The following are some of the legislative changes that came into effect on December 1 2015:

• From now on, every new application for a foreign investment has to be accompanied by a fee, without which the application will not be processed. Fees have to be paid for every application. For any application covering multiple categories, the fee for the category where the fee is the highest will have to be paid.
• The Australian Taxation Office (ATO) now will have greater powers to ensure compliance from these investors.
• Any investor who breaches these rules will have to bear strict penalties. The criminal penalties applicable for any violation of these rules have increased to $135,000 or three years of imprisonment or even both for individual investors. For companies, the fine will be up to $675,000.
• Foreign investments in agriculture will also come under these rules. The changes in regulations include the introduction of an agricultural land foreign ownership register, where the threshold limits for the purchase of agricultural land by individual foreign investors have been reduced to $15 million. The foreign investment review board will also compulsorily screen any investments in agribusinesses valued at over $55 million.

Overall, these regulations will modernise the framework of foreign investment in Australia and speed up the application process. The imposition of limits and penalties will improve compliance, which will go a long way in making all foreign investment environment in Australia robust and safe for both the people of Australia and the foreign investors alike.

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