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The federal government has launched a new “tip off” campaign that urges people to inform on foreigners suspected of illegally purchasing Australian residential real estate.
Treasurer Josh Frydenberg has announced that the federal government is launching a new “tip off and compliance campaign”, which seeks to ensure foreign persons purchasing residential real estate in Australia aren’t breaking foreign investment rules.
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It also aims to ensure that those who are breaking the rules “are subject to appropriate penalties”.
Under Australia’s foreign investment framework, foreigners seeking to purchase residential real estate in Australia generally need to apply for approval through the Foreign Investment Review Board (FIRB).
This applies to new dwellings, vacant residential land for development and, in some circumstances, established property. Applications, which come with a fee, need to be approved before foreign persons can purchase residential property.
Strict penalties (including civil and criminal prosecution resulting in large fines or up to three years’ imprisonment) may apply for breaches of Australia’s foreign investment rules.
Kickstarting the new initiative, the Treasurer called on anyone who has “information about someone who may be breaking the foreign investment rules” or anyone who may have “concerns about suspected illegal behaviour and activities by foreign persons relating to their ownership of Australian residential real estate” to make “a confidential tip-off” by calling the Australian Taxation Office’s hotline on 1800 060 062 or completing the online tip-off form.
He added that any foreign persons who have breached the rules should also contact the hotline, stating that “lower penalties may apply for foreign persons who come forward voluntarily”.
Mr Frydenberg commented: “Stronger and more flexible enforcement options will ensure that our foreign investment regime is able to respond to emerging risks and global developments.
“While the majority of foreign investors act in good faith in complying with the law, Australians expect their government to maintain a high standard of enforcement in order to safeguard Australia’s national interest, businesses and the economy,” the Treasurer said.
“Australia welcomes foreign investment for the significant benefits it provides, but the government will continue to ensure that all Australians can have confidence that their interests are being protected when it comes to foreign investment rules for residential real estate,” he added.
Widespread foreign investment reform
The move follows on from widespread reform and change in the way Australia treats foreign investment.
Earlier this year, the government introduced temporary rules to change the foreign investment review framework in a bid to “protect Australia’s national interest” as the country forged through the economic turmoil caused by the coronavirus (COVID-19) outbreak.
As of 29 March, all foreign investment has been subject to official approval.
While the temporary $0 monetary screening thresholds will be removed on 1 January 2021, when new foreign investment laws come into effect, mandatory screening of investments in sensitive national security businesses will continue at the current $0 monetary threshold.
The new laws
On 9 December 2020, legislation was passed that significantly reformed the Foreign Acquisitions and Takeovers Act 1975.
The reforms, which commence on 1 January 2021, seek to ensure that Australia’s foreign investment framework “keeps pace with emerging risks and global developments, including similar changes to foreign investment regimes in comparable countries,” Mr Frydenberg said at the time.
They require foreign investors to:
- seek approval for all investments in sensitive national security land or businesses (including starting such a business), regardless of value;
- be subject to enhanced monitoring and investigation powers, as well as stronger and more flexible enforcement options and penalties; and
- continue to bear the costs of administering the foreign investment regime, under a reformed fee framework that will be fairer and simpler for foreign investors.
The government has also introduced higher infringement notice penalties for residential land valued over $5 million, which aims to “support more effective enforcement”, as well as new civil penalties and infringement notices for providing false or misleading information.
Speaking after the legislation passed earlier this month, Mr Frydenberg said: “Australia will continue to welcome foreign investment for the significant benefits it provides but also ensure that investments are not contrary to the national interest.
“While the temporary thresholds have enabled greater scrutiny of investments, Australia has remained an attractive destination for foreign investment. Foreign investment inflows have remained robust during the pandemic, supporting Australia’s economic recovery.”
[Related: Foreign buyers struggle to secure mortgage]
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