Have you been overseas for an extended period? If so you may be considered a ‘foreign person’ in Australia and subject to the requirements of the Foreign Investment Review Board.
On 1 July 2023 new reporting obligations commenced, which may affect how you invest in and use property and other assets in Australia.
At law ‘foreign persons’ include more than just temporary residents. The key question is whether you have been ‘ordinarily resident in Australia’.
To be ordinarily resident in Australia, you must:
Even if you are a permanent resident or citizen but have not been in Australia for the required period, you may be considered a foreign person. However, there is an exemption for citizens with a close connection to Australia.
If you are not ordinarily resident in Australia, you will be considered a ‘foreign person’, and so will:
Foreign persons generally require approval from the Foreign Investment Review Board (FIRB) before investing in Australian assets, such as property.
As part of the Commonwealth government’s foreign investment reforms, a new Register of Foreign Ownership of Australian Assets was introduced on 1 July 2023 and replaces the previous registers.
When purchasing residential, commercial or agricultural land, registrable water interests, certain business and entity interests, or mining tenements, foreign persons must register those assets on the new Register.
The Register is maintained by the Australian Taxation Office and can be accessed via the Online Services Portal.
It is important to register an acquired asset within 30 days after settlement to avoid significant penalties. No fee is payable for registration.
If you sell or change your interest in the assets, if you are no longer a foreign person, or if the nature of the property changes, then you will need to update the Register.
The Foreign Acquisitions and Takeovers Act 1975 contains detailed provisions about when an interest must be registered, so if you are unsure we recommend seeking legal advice.
If you are a foreign owner of a residential property, you will need to lodge a vacancy fee return every year. This involves a declaration about how you have used your residential property in the last 12 months. This must be done within 30 days of the anniversary of your purchase of the property.
If you have not resided in or rented out your property for 6 months of the year, you will be required to pay a vacancy fee. There are exceptions, where the property was damaged or undergoing renovations or the resident was receiving medical care.
This only applies to residential property for which FIRB approval was sought after 9 May 2017.
If you are unsure whether you are a foreign person, or whether your assets need to be registered, please reach out to the commercial law team at Donovan Oates Hannaford for assistance.
