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As of 1 January 2023, investors who flout foreign investment laws for residential properties will be hit with double penalties.
Following up on the Albanese government’s election promise, the crackdown on investors shirking foreign investment laws is set to ensure the housing market “works as it’s supposed to for everyone else”, according to Minister for Housing, Homelessness, and Small Business, Julie Collins MP.
The new legislation is a part of the Albanese government’s overall plan to ensure that foreign investors comply with their legal obligations in Australia.
Ms Collins stated that the legislation will encourage investors to act within the law along with ensuring taxpayers are compensated when foreign investors are found to have broken the law.
“Doubling penalties will make it less likely that foreigners break the rules, and enable stronger enforcement action if they do,” Ms Collins said.
In addition, the Labor government is expecting the crackdown to generate a further $2.3 million in revenue for the budget over the forward estimates.
“Australia continues to be an attractive place for investment and this will not change that,” Ms Collins added.
“We welcome foreign investment in Australia because it plays a crucial role in Australia’s economic success and will continue to be important into the future.
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“We will always put Australian interests first, and that means ensuring Australians benefit from foreign investment here.”
Foreign investor fined $250k
In April 2022, residential real estate buyer Vijay Balasubramaniyan was penalised $250,000 after it was found that he purchased multiple properties in outer Melbourne without authorisation from the Foreign Investment Review Board (FIRB).
The Australian Taxation Office (ATO) filed proceedings in regard to six alleged breaches of the Foreign Acquisitions and Takeover Act 1975 (FATA) by Mr Balasubramaniyan in July 2020 on the back of an investigation that found he had purchased four properties while owning two established properties.
ATO Assistant Commissioner, Keir Cornish, welcomed the penalty decision at the time, saying it would serve as “a clear deterrent to other foreign investors who believe they can operate outside of the law”.
“There are obligations under Australian law for foreigners that have invested in, or plan to invest in Australian residential real estate,” Mr Cornish said.
“The ATO promotes voluntary compliance of the rules by foreign persons, but where foreign investors resist compliance action, stronger enforcement action is taken.”
[RELATED: Foreign Investor fined $250k for unauthorised property purchases]
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