The Treasurer has announced changes to Australia’s foreign investment review framework, effective from 10.30pm AEDT on Sunday 29 March 2020, relating to monetary thresholds and timeframes for reviewing applications. Details are available in our Guidance Note number 53, which addresses the effects of the changes. All material on this website should be read in light of the Treasurer’s announcement.

Compliance - reporting requirements for compliance and other purposes [GN51]

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Last updated April 2020

This Guidance Note provides information on circumstances where foreign investors need to report on their compliance with conditions and other matters, the different types of reports that might be required, and how a compliance report should be prepared. This note also includes a template for compliance reports at Attachment A. This note does not address requirements relating to audit reports that might also be required to be provided under conditions. For queries regarding audit requirements, see Guidance Note 52 or contact Treasury at firbcompliance@treasury.gov.au.

Under section 74 of the Foreign Acquisitions and Takeovers Act 1975 (FATA), the Treasurer may decide that the Commonwealth has no objection to certain foreign investments (defined in the FATA as ‘significant actions’), subject to one or more conditions being imposed that the Treasurer is satisfied are necessary to ensure the action will not be contrary to the national interest. Exemption certificates issued under the FATA may also include conditions that a foreign investor will need to comply with. Conditions imposed under an exemption certificate or a no objection notification may include a requirement that the foreign investor report back to Treasury on certain matters, including compliance with their conditions.

Treasury has responsibility for supporting the screening of foreign investment proposals which include business transactions, dealings with agricultural and commercial land, as well as supporting compliance and enforcement activities for those proposals. Screening of residential real estate acquisitions (including compliance) is handled by the Australian Tax Office (ATO). Further information on screening is contained in the Guidance Notes available on the Foreign Investment Review Board (FIRB) website.

A foreign investor’s specific compliance reporting obligations are set out in the relevant no objection notification or exemption certificate issued to that foreign investor. The information provided below is general advice and must be read in conjunction with the relevant no objection notification or exemption certificate. In fulfilling reporting requirements, compliance with the terms of the no objection notification or exemption certificate is paramount. 

Further information on Treasury’s foreign investment compliance policy can be found on the FIRB website.

Why do you need to report on your compliance?

Reporting by foreign investors provides assurance that they are complying with the conditions of their investment, and provides Treasury with information for monitoring compliance and targeting its compliance activities. Importantly, it also provides an avenue for foreign investors to continuously engage with Treasury on compliance issues, including potential instances of non-compliance.

Types of compliance reports

Whilst a foreign investor should rely on the specific reporting obligations set out in the relevant no objection notification or exemption certificate, the list below captures several of the categories reports fall in to:

  • Notifications about when proposed actions or transactions occur.
  • Reporting on acquisitions made under an exemption certificate.
  • Periodic reporting on compliance with tax and other conditions.
  • Reporting on breaches of conditions.
  • Reporting on remedial actions where a compliance issue has arisen.

This is not an exhaustive list, and in some cases, conditions may require a foreign investor to provide a bespoke report. Each type of report requires a different set of information, and a foreign investor may be required to submit more than one type of report for the same investment. 

How should a compliance report be prepared?

A report should be prepared in accordance with the conditions set out in the relevant no objection notification or exemption certificate (including those that have been subject to a variation).

Each type of report requires different information to be included, and there is no prescribed form or template for most reports unless otherwise provided in the condition. However, there is specific guidance for certain types of reporting (such as exemption certificates), and these are available on the FIRB website.

The Commonwealth is likely to consider the following factors in considering whether reports that have been prepared fulfil the relevant conditions:

  • Timeliness.
  • Who prepares and signs off on the report, and their role(s) in relation to the foreign investor (for example, CEO or Commonwealth approved independent auditor).
  • Accurate, factual and complete information.
  • Quality, depth and relevance of information and evidence provided.

Timeliness

Reports, including notifications of acquisitions, should be submitted by the date and via the mechanism (for example, email address) specified in the conditions. If the conditions are silent on the mechanism to submit the report, please email the compliance report to firbcompliance@treasury.gov.au.

The reporting period set out in the conditions should be adhered to. Where it is not clear when a compliance report is due, the generally acceptable practice is that it should be submitted as soon as practicable following the end of the reporting period or triggering event (for example, the completion of an acquisition). Failure to submit a report may result in a breach of the relevant conditions.

If there is a compelling commercial reason for varying the timing of the reporting period or when a specific report is due, foreign investors should engage as early as possible with Treasury at firbcompliance@treasury.gov.au. Treasury will seek to work with foreign investors to support them in achieving compliance, and in some instances, reporting deadlines may be able to be extended.

Tax reporting dates and accounting periods

If a foreign investor does not have tax obligations in Australia, then they should submit their report to the ATO in accordance with when the Australian target entity (if relevant) submits its tax returns.

If a foreign investor has tax obligations in Australia, then they should provide their standard tax conditions compliance report at the same time that they submit their annual tax return to the Australian Taxation Office (ATO). In preparing their report, they should use the accounting period of the standard Australian financial year (1 July to 30 June) or a substituted accounting period as approved by the ATO. For more information on substituted accounting periods, please see the ATO website.

For further information on reporting under tax conditions, please see below, and Guidance Note 47.

Who prepares and signs off on the report and their role(s) in relation to the investor

An investor’s conditions will generally state what is considered an appropriate level of assurance for a report (for example, that the report is to be signed by the chief executive officer of the foreign investor or an independent audit firm). If it does not, assurance should generally be provided by an officer1 of the investor. The report should specify that the assurance was given on the basis of reasonable enquiries made by the person signing it, and should detail any elements of material non-compliance with the relevant conditions. The person signing off the report should be able to explain, if asked, the processes undertaken and evidence examined to enable them to provide their assurance.

If investors remain in doubt about who should sign off on a report, they should contact Treasury at firbcompliance@treasury.gov.au

Accurate, factual and complete information

A significant and important element of compliance and other reporting is providing information that is accurate, factual and complete. It is also important to provide appropriate assurance of this.

The information provided should not have significant gaps, it should present facts that can be verified if needed, and it should be sufficiently complete that it can be used to make informed decisions about the foreign investor’s degree of compliance. 

Investors should be aware that it is an offence under Part 7.4 of the Criminal Code to provide false or misleading information or documents to a Commonwealth officer or entity, or in compliance or purported compliance with a law of the Commonwealth.

Quality, depth and relevance of information and evidence provided

Reports should be prepared in accordance with the relevant conditions. All reports should contain necessary details so that it is clear who the investor is, what the action (that is, the relevant investment) is that has been taken, which conditions are being complied with, and who the person responsible is for providing assurance of compliance. Such details may include, but are not limited to:

  • the name of the foreign investor and the file numbers relevant to the application;
  • the name and authority of the person/s signing off on the report;
  • the date by which the report was required to be submitted;
  • the dates the action/s were approved, and the dates they were completed;
  • the other parties to the action/transaction; and
  • the name of the entity/entities performing the action, its ultimate owner/s, and the executive officer/s with ultimate responsibility for the action.

Reporting under tax conditions

We recommend that foreign investors with tax conditions refer to the guidance for reporting on standard tax conditions, which can be found in Guidance Note 47 and its Attachments, particularly Attachment E.

Further information

If you would like further information on your compliance obligations as a foreign investor, we encourage you to engage with us by emailing us at firbcompliance@treasury.gov.au.


1 As defined in section 9 of the Corporations Act 2001 (Cth).


Attachment A: Compliance report on foreign investment conditions

This template is not a prescribed form for preparing a compliance report, however, it may be used as guidance for the structure and content of such a report. The italicised text is to provide further explanation and examples, and should not be left in the compliance report that is submitted.

Where a foreign investor has multiple no objection notifications in relation to one transaction or related transactions, the investor may seek Treasury’s consent to prepare one report for the no objection notifications that have the same conditions. For example, if Investor A is acquiring multiple Australian entities in a corporate group, they may receive a no objection notification for each acquisition. If all of these no objection notifications are subject to the same conditions and have the same reporting obligations, then, subject to Treasury’s consent, the investor may be able to prepare the one report in relation to all of these no objection notifications.

Compliance Report Template

Investor: Foreign Investor Plc

Ref: FI20XX/XXXXX [include any other relevant approvals]

Reporting Year/period: DD/MM/YYYY – DD/MM/YYYY

Date report due: DD/MM/YYYY

Actions in this report: [This information is usually required for notifications about when relevant actions or transactions occurred. Please delete if not required]

Action
[a description of the action/s taken under the no objection notification/s/ exemption certificate]

Approval
[the reference of the no objection notification/ exemption certificate for the action]

Approved
[the date the  no objection notification for the action/exemption ceritficate was issued]

Completed, and by whom
[the date the action was completed, and the name of the person/entity that completed the action]

Ultimate owner
[if the action relates to acquiring or selling an asset (including a company) the name of the person/entity that is the ultimate owner of the asset]

Other Parties
[the names of any other parties involved in the action and the country they are based in]

Value
[the monetary amount in Australian dollars the investor paid/gained as part of completing the action, for example, the amount paid to acquire a business]

Acquisition of Target Company 123 Pty Ltd

FI20XX/XXXXX

Approved DD/MM/YYYY

Acquired DD/MM/YYYY
Acquired by Subsidiary Company of Foreign Investor Plc

Holding company of Foreign Investor Plc

 

AUD$XX

Merger with Multinational Corporation XYZ Ltd

FI20XY/YYYYY

Approved DD/MM/YYYY

Acquired DD/MM/YYYY

 

Overseas Equity Financier LLP

AUD$YY

Lease of Office Property, Name Street, City, State, Postcode

FI20XZ/ZZZZZ

Approved DD/MM/YYYY

Acquired DD/MM/YYYY

 

 

AUD$ZZ

Compliance with conditions:

[This table should address all of the conditions under a no objection notification or relevant conditions in an exemption certificate that a foreign investor is required to comply with. This information is required when reporting on breaches of, and/or compliance with, a no objection notification or exemption certificate.

If the conditions for multiple related no objection notifications are the same, then the same table can be used, but it should be clear to which no objection notification any instances of non-compliance relate to.

Please delete if not required.]

Condition

Compliant?

Details (if non-compliance)

1: text of condition

Y/N

For example:  Not compliant – report was submitted 14 days after the due date. The date was marked incorrectly in our own records. Treasury was informed of non-compliance as soon as practicable and they agreed that no action should be taken at this stage.

Information about remedial action should also be included here.

2: text of condition

Y/N

 

3: text of condition

Y/N

 

4: text of condition

Y/N

 

Additional considerations for Treasury

[Please include any additional information that you would like to provide to Treasury in relation to your conditions, or any questions about your conditions.]

Assurance

I confirm that I have made reasonable enquiries about the accuracy of the information contained in this report, and am satisfied that the information contained in this report is accurate.

Name and Title Jane Doe, Chief Executive Officer, Foreign Investor Plc [The person signing the report should have the appropriate authority to do so. Where a representative of the investor (for example, a lawyer) is signing off on the report, it should be clear that they have been appointed as the representative.]

Date DD/MM/YYYY

Signed

 

Reports should be emailed to:
FIRBCompliance@Treasury.gov.au


Important notice: The Commonwealth makes all reasonable efforts to ensure the information provided is correct. However, the information provided is a general guide only and the Commonwealth does not make any representation or warranty about the accuracy, currency or completeness of the information. It also does not accept any responsibility or liability for any loss, however caused, arising from the use of, or reliance on, the information provided. Before relying on any information provided, you should make your own enquiries and seek independent professional advice.