Foreign investment fees
In April 2024, legislation commenced implementing changes to the foreign investment framework that were announced by government in December 2023.
Key changes included:
- Tripling foreign investment fees for the purchase of established homes.
- Doubling vacancy fees for all foreign-owned dwellings.
- Clarification that foreign investment fees and similar state and territory property taxes prevail in the event of any inconsistency with double tax agreements implemented domestically. This amendment applies retrospectively.
ATO systems have been updated to reflect the new fees.
Foreign purchases and sales of residential real estate 2022–23
The Insights into foreign purchases and sales of residential real estate 2022-23External Link (the Insights) were published on 21 June 2024.
This annual publication presents information from the Register of foreign ownership of residential land (the Register), administered by the ATO.
The Insights details residential land transactions undertaken by foreign persons as defined by the Foreign Acquisitions and Takeovers Act 1975 (FATA). Care should be taken when comparing this data to other publications that may be based on different definitions or include proposed investment information.
The data captures self-registered and data-matched transactions using Land Title settlement records from state and territory Revenue Offices.
Foreign persons (as defined under the FATA) make up a very small proportion of Australian residential dwelling purchases, accounting for 5,360 purchases in 2022–23. This figure includes new dwellings, established dwellings and vacant land.
From 1 July 2023 the new Register of Foreign Ownership of Australian Assets commenced. combining the existing registers for agricultural and residential land and water entitlements and expands on the assets which must be registered.
NAB quarterly residential property survey
National Australia Bank (NAB) presented the most recent NAB quarterly Australian residential property survey.
The quarter 1 (Q1) 2024 survey was published in May 2024 and includes information gathered from approximately 300 industry professionals who are asked about sentiment and expectations of property investment activity including from overseas buyers. This survey has been running since 2011 and is a useful index for tracking overseas buyer sentiment over time.
In discussing the survey, the differences in methodology used by NAB and the data collected by the ATO through the Register of Foreign Ownership of Australian Assets were contrasted. While the NAB Q1 2024 report indicates that survey participants reported foreign buyer sentiment at 10% of new dwelling purchases, this does not translate into purchases by foreign persons as defined in the Foreign Acquisitions and Takeovers Act 1975 as counted by the register of foreign ownership of residential land.
ATO tax consults
Treasury is responsible for administering the foreign commercial investment framework to ensure foreign investment aligns with Australia's national security and national interest tests.
The ATO’s role is to look at proposed transactions, with tax being one consideration under the national interest test.
We review proposed transactions to consider any associated tax risks.
Standard and additional tax conditions are recommended by the ATO on all proposals rated as medium or high risk.
Recent changes to the foreign investment framework are aimed at streamlining to deliver a stronger, faster and more transparent approach to foreign investment. The key concept of national interest test remains.
Streamlining means investors we already know, who are making non-sensitive investments and have a good compliance record get decisions faster.
The ATO continues to work closely with Treasury on the revised approach by providing feedback and updating Guidance Notes and Tax Checklist to improve alignment of the foreign investment framework with government’s multinational tax avoidance agenda.
To enable faster decisions on proposals, applicants should provide as much information as possible in their application.
Group governance
The ATO is introducing integrity declarations across all consultation groups. Integrity Declarations confirm a member’s compliance regarding their personal affairs, relevant codes of professional conduct, confidentiality, and conflicts of interest. Where a member’s circumstances change, and these materially affect a signed declaration, including where they change jobs or are no longer representing a specific organisation or association, the member must advise the chair.
Declarations will be distributed to group members for completion shortly.