Investing in Australia can be daunting at the best of times, but even more so when you’re a foreign resident.
If you’re neither an Australian citizen nor a permanent resident, different rules will apply to you when purchasing property or another type of investment. You may need to apply for Foreign Investment Approval from the Treasury through the Australian Taxation Office, depending on your investment, and the process can be tricky.
We’ve teamed up with Sam Saad, Partner, and Al-Karim Madhavji, Associate, at Long Saad Woodbridge Lawyers, to find out what you need to know.
First up, what’s the Foreign Investment Review Board?
The Foreign Investment Review Board, commonly called the FIRB, is a body dedicated to assessing foreign investment in Australia.
Both the FIRB and the Australian Taxation Office (ATO) are tasked with enforcing Australia’s foreign investment framework, which covers all manner of investments by foreign citizens. This includes residential and commercial real estate, agricultural land, and mining and exploration tenements.
The FIRB and the ATO evaluate proposals to invest in Australia against strict criteria to ensure the proposed investment is in Australia’s best interests.
What’s the process for applying if I want to invest in property?
The Treasurer will assess each submission on its merit based on guidance from the FIRB and the ATO. No matter the kind of property you want to invest in, you may need approval before you make an offer or bid.
If you're planning to invest in residential property in Australia, you can submit your proposal through the ATO. If your investment is in commercial property or any other kind of investment, you must lodge your proposal with the FIRB directly.
Applications are made online, and the approval process is typically fast. Once you’ve received approval, you’ll want to make note of any special conditions. For residential properties, these could include:
Registering your property on the Register of Foreign Ownership of Australian Assets
Complying with vacancy fee laws
Other conditions will apply to submissions to purchase or invest in other Australian assets. You must comply with any and all conditions your approval is subject to.
Top tips for a successful submission
Al-Karim has worked with clients seeking investment approval and warns that the process is complicated.
Pitfalls range from clients being unaware they need FIRB or ATO approval to something as simple as paying the wrong submission fee.
His top tips for a winning submission include:
Make sure you get legal advice
The foreign investment framework is complex. As an individual, you may find it challenging to submit a complete application, so legal advice is the way to go.
Al-Karim recommends finding an experienced property lawyer with knowledge of the foreign investment framework and an understanding of both state and federal property tax laws.
Choose the property first
FIRB and ATO approvals are generally granted for the purchase of a specific property. If this isn’t possible, you can apply for an exemption certificate, which allows you to make bids or offers on multiple properties in a specific Australian state for a particular period.
Exemption certificates can also be granted to vendors. If this is the case for the property you’re interested in, you won’t need to apply for a separate exemption certificate.
Check the details
You must ensure you’re submitting all relevant information to the FIRB or ATO, and you should double and triple-check the details. This includes paying the correct amount to lodge your submission.
Small details like these can make or break your application, so it’s best to confirm they’re correct before submitting. If you need to lodge a new application or change your existing one, you’ll likely need to pay another submission fee and may face a fine if the information you provide is incorrect.
“I’ve seen people getting approvals but not following the conditions that were imposed on the approval, such as using the property as an investment when it should have been used only as owner occupier or failing to lodge vacancy returns,” says Al-Karim.
Foreign investment is an essential part of Australia’s economy, but it’s heavily regulated to ensure it happens in line with Australia’s national interests. Whether you’re looking to jointly own property with your Australian citizen partner, want to invest in Australia’s lucrative rental market, or simply wish to call Australia home, investment approval is a critical first step.
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