Proposed direct interests in an agribusiness generally require approval where the value of the investment is more than $60 million, with an exemption sometimes applying to investors from certain of Australia’s trade agreement partners and a $0 threshold applying to foreign government investors. Section 12 of the Regulation defines an Australian entity or Australian business to be an agribusiness when the following two circumstances are met.
What is an agribusiness?
- The Australian entity or Australian business uses assets in carrying on a business wholly or partly, in any of the following industries:
- any class of Division A – Agriculture, Forestry and Fishing;
- Meat processing;
- Poultry processing;
- Seafood processing;
- Milk and cream processing;
- Cheese and other dairy product manufacturing;
- Fruit and vegetable processing;
- Oil and Fat manufacturing;
- Grain mill product manufacturing; and
- Sugar manufacturing.
- For an Australian entity:
- the value of the assets of the entity and subsidiaries of the entity, used in carrying on an agribusiness exceeds 25 per cent of the total asset value of the entity; or
- the earnings before interest and tax derived by the entity and its subsidiaries in the above classes in the most recent financial year for which there are audited accounts, exceeds 25 per cent of the total earnings for the entity.
- For an Australian business, the value of the assets of the business used in carrying on an agribusiness exceeds 25 per cent of the value of the total assets of the business.
- For an Australian entity:
Proposed investments in agricultural land generally require approval where the cumulative value of a foreign person’s agricultural land holdings exceeds $15 million, with exceptions applying to investors from Australia’s trade agreement partners and a $0 threshold applying to Foreign Government investors.
All acquisitions of interests in agricultural land by foreign persons regardless of whether they require approval and regardless of value must be notified to the Australian Taxation Office Register of Foreign Ownership.
What is agricultural land?
Agricultural land is land in Australia that is used, or that could reasonably be used, for a primary production business. This includes land which is partially used for a primary production business, or land where only part of the land could reasonably be used for a primary productions business.
The definition of a primary production business is the same the definition in subsection 995-1(1) of the Income Tax Assessment Act 1997.
A person carried on a primary production business if the person carries on a business of:
- cultivating or propagating plants, fungi or their products or parts (including seeds, spores, bulbs and similar things), in any physical environment;
- maintaining animals for the purpose of selling them or their bodily produce (including natural increase);
- manufacturing dairy produce from raw material that you produced;
- conducting operations relating directly to taking or catching fish, turtles, dugong, bêche-de-mer, crustaceans or aquatic molluscs;
- conducting operations relating directly to taking or culturing pearls or pearl shell;
- planting or tending trees in a plantation or forest that are intended to be felled;
- felling trees in a plantation or forest; or
- transporting trees, or parts of trees, that you felled in a plantation or forest to the place:
- where they are first to be milled or processed; or
- from which they are to be transported to the place where they are first to be milled or processed.
Exemptions for wind or solar power stations
The thresholds for agricultural land do not apply to certain acquisitions of agricultural land by owners or operators of wind or solar power stations. A “wind or solar power station” is defined in section 5 of the Foreign Acquisitions and Takeovers Regulation 2015 to mean a wind power station or solar electricity generation system that is an accredited power station as defined in the Renewable Energy (Electricity) Act 2000.
Owners and operators of solar and wind power stations that acquire an interest in agricultural land on which there is a wind or solar power station, and their acquisition is for the sole purpose of operating a wind or solar power station on the land, can disregard that the land is agricultural land for the purposes of the Act. In such circumstances even if the land still meets the usual test for agricultural land it is treated as if it is not agricultural land for the purposes of screening and specified thresholds for the other type of land will apply. For example, if it is considered non-vacant commercial land then the applicable threshold for such land will apply.