ATO – Foreign Investment litigation update
Jennifer Farley – ATO
The ATO is currently awaiting judgment in the first case to apply a civil penalty order to conduct contravening the Foreign Acquisitions and Takeovers Act 1975. The case is: Commissioner of Taxation of the Commonwealth of Australia v Vijay Balasubramaniyan
The Commissioner filed a case in July 2020 for six alleged contraventions of the Foreign Acquisitions and Takeovers Act 1975. The contraventions were four counts of failing to give notice in contravention of section 94 and two counts of a temporary resident holding more than one established dwelling in contravention of section 95.
The properties were moderately priced properties in outer Melbourne suburbs. The respondent had worked in the migration and real estate sectors and had not been willing to bring themselves into compliance by self-disposing of property during the ATO’s compliance case.
In line with model litigant principles, Australian Government Solicitor represented the Commissioner with barrister Sam Ure as counsel. The case proceeded through mediation during which the respondent admitted liability. A hearing on penalty commenced on 17 September 2021, with a second hearing on 18 March before Justice Beach in the Federal Court. Proceedings have been adjourned with judgment reserved.
Treasury’s digital transformation consultation update
Ben Evans – Treasury
The Foreign Investment Division at Treasury are undertaking a major transformation that includes a new IT project. We will see a first release at the end of the year.
We have partnered with Deloitte Australia as our delivery partner for this transformation.
The transformation will see:
- faster and more enhanced decisions
- new and easier to use investor portal
- new case management solution.
- new register.
We have also been conducting several consultation sessions with stakeholders that may be present in this forum.
Contact FITC@treasure.gov.auThis link opens in a new windowfor any questions or concerns.
Introduction of the Register of Foreign Owned Australian Assets and ‘Online Services for Foreign Investors’
Bernie Sabine – ATO
In June 2020, the Treasurer announced reforms to Australia’s foreign investment framework. While the Treasury oversees the foreign investment framework, some of the administrative work is completed by the ATO.
In support of the Government’s reforms, the ATO was requested to build a Register of Foreign Ownership of Australian Assets (FOAAR) to replace a number of existing registers, including the ATO, land and water register.
As part of the FOAAR project, a new online services website will be released, titled, Online services for foreign investors. This new service will change the way foreign investor foreign investors and their representative will interact with the ATO.
The ATO will commence tranches of communications including consultations. If you have any questions, you can direct them to firbatocomms@ato.gov.auThis link opens in a new window
The current Register has 3 assets types, Agricultural land, water entitlements and residential land.
The new Register has the existing asset types and new asset types: commercial land, mining and production tenements, business assets and agreements, other categories that meet the National Security Test and other significant notifiable actions.
The online services for foreign investors platform will require foreign investors to create a digital ID and confirm proof of identity. Foreign investors can also authorise a representative.
Online services for foreign investors will allow foreign investors and their representatives to apply for foreign investment approval, report on obligations and register acquisitions of the various assets.
Key points:
- Foreign investors may need to register for a myGovID and complete identification checks, known as Proof of record ownership.
- Representatives of foreign investors will need be authorised to complete any services for foreign investors.
We are undertaking user testing of a prototype in May 2022 via the WebEx service, please contact Joel.Donoghue@ato.gov.auThis link opens in a new window if you require further information or would like to be involved.
ATO communications update
Joel Donoghue – ATO
Recently, two key reports on the foreign ownership of agricultural land and water entitlements were tabled in Parliament and published:
- Register of foreign ownership of agricultural land - Report of registrations as at 30 June 2021External Link
- Register of foreign ownership of water entitlements - Report of registrations as at 30 June 2021External Link.
Key findings show the level of foreign ownership of:
- Agricultural land as at 30 June 2021 was 14.1%, compared to 13.8% as at 30 June 2020, with the majority continuing to be in the form of leasehold interests.
- Water entitlements ownership as at 30 June 2021 was 11%, compared to 10.9% as at 30 June 2020, with the agriculture sectors being the main users of water entitlements.
We have updated our website with new information that will help you understand the responsibilities and obligations that foreign persons have when investing in Australian residential real estate.
Summary of key topics discussed at the Foreign Investment Stakeholder Group meeting 24 March 2022.