Changes to Foreign Investment laws
There has been a lot of publicity in the media about foreign investment into Australia and it is proving fertile ground for policy in both the Federal and State political arenas. Concerns about foreign investment in land range from limiting the ownership and control of land, to ensuring appropriate tax and even occupancy requirements are imposed and capable of being enforced.
Federal budget amendments –
- On sales - the capital gains tax withholding regime. Effective 1 July 2017, if a clearance certificate is not obtained from the ATO, the percentage of price that must be withheld has increased to 12.5% (previously 10%). The sale price threshold has decreased from $2,000,000 to $750,000, meaning that this regime applies to a much wider range of transactions.
- Annual vacancy charge – a charge equivalent to the foreign investment application fee imposed at the time of purchase, will be imposed annually where the property is not occupied or available for rent for at least 6 months of the year. This will be applied to foreign buyers who apply for approval to purchase after 9 May 2017.
- Sales of new properties – on applications for new dwelling exemption certificates lodged after 9 May 2017, a cap of 50% will apply to the number of lots that can be sold.
- Increases to fees – application fees payable to the Foreign Investment Review Board (FIRB) for approval, will increase by 10% on the current fees, for residential purchases up to $10,000,000. The fee for all other types of acquisitions has been updated.
- Streamlining of framework – a raft of other amendments to improve efficiencies and to address other aspects that have proven to be historically problematic over time, will be revised.