The Australian Government is taking action to strengthen the integrity of the foreign investment framework. Foreign investment is integral to Australia’s economy and we welcome all investment that is not contrary to our national interest.

Recently, there have been changes to the rules that affect foreign investors who are seeking to purchase property and those who already own property in Australia. The Australian Taxation Office (ATO) and Treasury will administer the new framework together, with the transfer of all residential real estate functions to the ATO from 1 December 2015. Real estate agents can help their foreign investor clients by advising them of the new rules.

1. Foreign investors must obtain approval from the Foreign Investment Review Board before purchasing their property. If they do not, penalties may apply. Remind your foreign investor clients who already hold residential real estate to check whether they have the necessary approval. If they did not obtain approval before purchase, or are not sure, they should come forward before 1 December 2015. During this reduced penalty period cases will not be referred for prosecution although divestment orders may still apply.

2. From 1 December 2015, new criminal and civil penalties will apply to foreign investors who do not have approval before purchasing residential real estate or who hold property in breach of the foreign investment rules. Advise your clients of this before they purchase.

3. Also, from 1 December 2015, the ATO will commence collecting fees from foreign investors when they lodge an application for approval to purchase all Australian property. Advise your clients that the fee will be collected during the application process. Further information on applicable fees is available at firb.gov.au

4. A register of foreign residential real estate holdings will commence from 1 July 2016.

The ATO is now responsible for foreign investment in residential real estate compliance action and draws on its data matching and investigative capability. To date, 50 officers are conducting over 462 investigations to check compliance with foreign investment rules, tax laws and other regulations, self-disclosures and reports from concerned citizens.