House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

Chapter 9 - Application and transitional provisions for Schedules 1 and 2 and Fees Imposition Act

Outline of chapter

9.1 Schedule 3 to this Bill sets out various provisions that are necessary to provide for a smooth transition from the Act as it stands immediately before the provisions included in Schedule 1 come into effect and the provisions in the Act which come into effect immediately after the provisions included in Schedule 1 commence.

Detailed explanation of new law

Definitions

9.2 The provisions in Schedule 3 to the Bill rely on the definitions of the following terms: new provisions, old provisions, Policy and transitional period.

9.3 The term old provisions is defined to mean the Act as in force immediately before Schedule 1 to this Bill commences. New provisions is defined to mean the Act as in force immediately after Schedule 1 to this Bill commences. The term Policy refers to Australia's Foreign Investment Policy, which provides guidance to foreign investors to assist understanding of the Government's approach to administering the Act, as well as identifying certain other investments that the Treasurer must be informed of. Transitional period is defined to mean the period beginning on 1 March 2015 and ending on 30 November 2015. [Schedule 3, item 1]

Notices given before commencement

9.4 The following table explains how notices given under the old provisions are treated once the new provisions come into force. [Schedule 3, item 2]

Notices given during the transitional period in relation to actions relating to rural land

9.5 A notice given under sections 25 or 26 of the old provisions or the Policy during the transitional period in relation to rural land is taken, after commencement, to be a notice given under section 81 of the new provisions in relation to agricultural land. 'Australian rural land' is defined by old section 5 to mean land situated in Australia that is used wholly and exclusively for carrying on a business of primary production. The time limits on making orders and decisions specified in new section 77 apply to such a notice.

9.6 A notice given by the Treasurer in accordance with the Policy during the transitional period in relation to an acquisition or proposed acquisition of Australian rural land binds the Commonwealth after commencement. [Schedule 3, item 3]

Actions taken during transitional period in relation to Australian rural land

9.7 A foreign person who acquires an interest in Australian rural land during the period beginning on 1 March 2015 and ending on 30 November 2015 must notify the Treasurer in accordance with section 135 of the new provisions unless the person has already notified the Treasurer of the acquisition or proposed acquisition.

9.8 The Bill makes it an offence for a foreign person to acquire an interest in Australian rural land during the transitional period if the person fails to notify the Treasurer of the acquisition during the transitional period or within 30 days of commencement. The maximum penalty for an individual who commits this offence is imprisonment for three years, a fine equivalent to 750 penalty units (currently $135,000), or both. If a body corporate commits this offence the maximum penalty that may be imposed is a fine equivalent to 3,750 penalty units (currently $675,000).

9.9 A person who fails to comply with these requirements may also be liable to a civil penalty. The maximum penalty for the contravention is a pecuniary penalty of 250 penalty units. [Schedule 3, item 4]

Orders, advices and decisions

9.10 The following table explains how an order or advice given, or a decision made, under the old provisions are taken to have been given or made under the new provisions.

9.11 The new provisions apply, after commencement, in relation to orders and advices mentioned in column 1 of the table as if subparagraph 71(1)(ii) and paragraph 74(6)(b) does not apply. Paragraph 71(1)(i) of the new provisions permits the Treasurer to vary an order made under Subdivision A of Division 2 of Part 3 of the new provisions at any time if the Treasurer is satisfied that that the variation does not disadvantage the person. Paragraph 74(6)(b) of the new provisions enables the Treasurer to vary a no objection notification given to a person by imposing a new condition or varying an existing condition if the Treasurer is satisfied that the new condition or variation does not disadvantage the person. The purpose of providing that subparagraph 71(1)(ii) and paragraph 74(6)(b) do not apply to orders made or given under the old provisions is to ensure that the operation of old orders is certain.

9.12 If an order is published in the Commonwealth of Australia Gazette (Gazette) before the Acts and Instruments (Framework Reform) Act 2015 comes into effect and the period referred to in section 25 of the old provisions has not ended by that commencement, the new provisions apply as if a reference to the registration of a notifiable instrument were a reference to publication in the Gazette. [Schedule 3, item 5]

Disposal orders

9.13 Section 69 of the new provisions enables the Treasurer to make a wide range of orders if the Treasurer is satisfied that a significant action has been taken and the result of taking that action is contrary to the national interest. The Treasurer may also make an order under section 74 of the new provisions in relation to:

•

any significant action taken before commencement if the Treasurer would have had the power to make an order under subsections 18(4), 19(4), 20(3), 21(3) or 21A(4) of the old provisions in relation to the action;

•

any acquisition of an interest in Australian rural land taken during the transitional period; or

•

any significant action taken after commencement. [Schedule 3, item 6]

Anti-avoidance

9.14 Section 78 of the new provisions, which in general terms permits the Treasurer to make an order with respect to a scheme carried out for the sole or dominant purpose of avoiding the application of this Act, applies to any scheme whether entered into before or after the commencement of Schedule 1. [Schedule 3, item 7]

Certificates

Certificates given before commencement

9.15 Except for the purposes of section 113 of the new provisions (which specifies when fees are payable), a certificate given under paragraph 3(e) or (r) of the Foreign Acquisitions and Takeovers Regulations 1989 (Regulations) before commencement is taken after commencement to have been given under section 57 of the new provisions (exemptions certificates for new dwellings).

9.16 Except for the purposes of section 113 of the new provisions (which specifies when fees are payable), a certificate given under paragraph 3(h) of the Regulations before commencement is taken, after commencement, to have been given under section 58 of the new provisions (exemptions certificates for foreign persons).

Applications for certificates made before commencement

9.17 The Treasurer may give a certificate under sections 57 or 58 of the new provisions to a person if the person made an application for a certificate under paragraph 3(e), (h) or (r) of the Regulations before commencement and a decision on the application has not been made at that time. [Schedule 3, item 8]

Offences and civil penalties

9.18 With the exception of sections 102 (liability for officers of corporations) and 103 (civil penalties for officers of corporations), Part 5 of the new provisions apply in relation to any conduct engaged in after commencement.

9.19 Sections 102 and 103 of the new provisions apply in relation to any conduct engaged in after the commencement of Schedule 1 by an officer of a corporation if the corporation is convicted of an offence against this Act or a civil penalty provision is made against the corporation after commencement. [Schedule 3, item 9]

Fees

9.20 Section 113 (when fees are payable) of the new provisions applies in relation to:

•

applications made after commencement under the new provisions;

•

orders and notices given after commencement in relation to action taken in relation to rural land during the transition period; and

•

orders and notices given after commencement in relation to action taken after commencement. [Schedule 3, item 10]

Record keeping

9.21 Division 2 of Part 7 of the new provisions (which imposes record keeping requirements) applies in relation to:

•

any action taken by the person that is a significant action or a notifiable action that relates to an order or decision made under Part 3 of the new provisions after the commencement of Schedule 1;

•

any action, transaction, event or circumstance that relates to whether a person is complying with a condition in a no objection notification imposing conditions or an exemption certificate that occur after commencement taken by the person that is specified in an exemption certificate after the commencement of Schedule 1 (regardless of whether the notice or certificate is given before or after the commencement of Schedule 1); and

•

disposals of residential land that occur after the commencement of Schedule 1. [Schedule 3, item 11]

Confidentiality

9.22 Division 3 of Part 7 of the new provisions apply in relation to records, disclosures and uses or protected information made after commencement, regardless of whether the protected information was obtained before or after that time. [Schedule 3, item 12]

Transitional rules

9.23 The Treasurer may make rules prescribing matters of a transitional nature (including prescribing any saving or application provisions) relating to the amendments or repeals made by this Act. However, the rules may not create an offence or civil penalty; provide powers of arrest or detention or entry, search or seizure; impose a tax; set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act or directly amend the text in this Act. [Schedule 3, item 13]