1 July amendments to streamline and enhance Australia’s foreign investment framework
Changes to the foreign investment framework announced in the 2017-18 Budget and additional technical amendments take effect from 1 July 2017.
The changes enhance and streamline the operation of the foreign investment framework by simplifying aspects of the regulations and the fee framework. The changes were informed by a four week public consultation and stakeholder engagement process in March 2017 and further consultation following the 2017-18 Budget announcement.
Overview of key amendments
Introduction of new exemption certificates to streamline the processing of multiple transactions
- Exemption certificate for businesses or entities: The new business exemption certificate will allow foreign investors to seek broad pre-approval for a program of investment activity over a period specified in the certificate. The business exemption certificate is modelled on the existing exemption certificate for interests in land.
Further information on the business and entities exemption certificate can be found in Guidance Note 26.
- Exemption certificates for residential land: Two new exemption certificates have been introduced to address anomalies and inconsistencies in processing residential applications.
- Exemption certificate for residential land (near-new dwelling interests).
- Exemption certificate for residential land (other than established dwellings).
Clarifying the treatment of land used for commercial purposes
Residential premises that have a commercial use, such as student accommodation, aged care facilities and retirement villages, will now be treated as commercial residential premises and screened under commercial land thresholds ($55 million or $252 million depending on the nature of the commercial land).
Further information can be found in Guidance Note 15.
Clarifying the treatment of land used or intended to be used as a solar or wind farm
Land with existing wind and/or solar power station infrastructure will be treated as non-vacant commercial land, for notification and significant action purposes, where the use of the land is predominantly for a wind and/or solar power station.
Further information can be found in Guidance Note 50.
Remove routine and low-risk transactions from ‘low threshold’ non-vacant commercial land
The scope of non-vacant commercial land treated as sensitive and subject to the lower $55 million screening threshold has been narrowed by removing ‘prescribed airspace’ and by narrowing the scope of entities captured under Government leases to remove the majority of leases to Commonwealth corporate entities.
Further information can be found in Guidance Note 14.
Streamlined and simplified commercial fee framework
The commercial fee framework has been streamlined and simplified to reduce complexity and achieve more equitable fee outcomes.
The lower fee rule for majority owners has been expanded to capture a broader range of acquisitions including acquisitions involving land, entities, assets or tenements provided certain qualifications are met.
Most residential property application fees will increase by 10 per cent from 1 July 2017 to fund the Critical Infrastructure Centre.
Restoring the custodian holdings exemption and reducing regulatory burden for offshore global transactions
- The custodian holding exemption has been restored, meaning that companies which become foreign persons by virtue of their foreign custodian holdings are not subject to notification requirements or land and water registration requirements.
- Thresholds for global acquisitions that result in an acquisition of Australian interests by a foreign government investor have been increased to only capture acquisitions that result in a 5 per cent share of the global firm’s total assets and/or where the value is $55 million or less.
Improving the operation of the exemption for small interests in unlisted land entities and streamlining consortium rules
- The 100 security holders requirement for the existing exemption for interests in securities in unlisted Australian land entities of less than 5 per cent has been omitted to better align the exemption with commercial practice.
- Foreign government investors who establish a consortium vehicle to ‘start an Australian business’ will be exempt from the framework where they already carry on the same business in Australia.
- Foreign government investor acquisitions of direct interests in a consortium vehicle to affect the purchase of an asset have been excluded from constituting a notifiable and significant action.