ATO 2023 Update: The Register of Foreign Ownership of Australian Assets

RegisterofForeignOwnershipof AustralianAssets

Changestoinvestorobligations

ChrisFrithLaw&PolicyManagerForeignInvestment Programs

Legalobligationsforforeigninvestors

ObtainingapprovalandregisteringcertainassetsinAustralia

Importantchanges

Whatlegalpractitionersshouldknowabout

ForeignAcquisitionsandTakeoversAct1975(FATA)

Regulationisdoneinpartnership:

ATO residentialrealestateandforeignregisters Treasury

non-residentialassetsandoverallpolicyowner

Moreinformationat:

ForeignInvestmentinAustralia(Treasury)www.foreigninvestment.gov.au

Forquestionsregardingcurrentapplicationsandfees,emailFIRBResidential@ato.gov.au

INTERNAL/EXTERNAL

ObtainingFIRBapprovalbeforeinvesting

Landvaluethresholds

InvestorActionThreshold morethan:

All investors

Private investors from certain FTA partners1

Nationalsecurityland$0

Residentialland$0

Vacantcommercial land$0

AgriculturallandForChile,NewZealand,andtheUnitedStates, $1,339million

Others,$15million(cumulative)

Developedcommercialland$1,339million2

Miningandproduction tenements

ForChile,NewZealand,andtheUnitedStates, $1,339million

Others,$0

Private investors not from a certain FTA partner

AgriculturallandForThailand,$50million

Others,$15million(cumulative)

Developedcommercialland$310million

Wherethelandissensitive3,$67million

ForIndia,non-sensitivelandforthesupplyof services,$500million4

Miningandproduction tenements $0

Allinvestments$0

Foreign government investors

INTERNAL/EXTERNAL

Allresidentialproperty

Allvacantcommercialland

Developedcommerciallandabovethreshold

Businessinterestsspecificrulesandthresholds

Agriculturallandabovethreshold

INTERNAL/EXTERNAL

Feesforlodgingapplications

KindofactionApplicablefees

Residentialland

Agriculturalland

Commercial land and tenements

Feetiersincreaseevery$1millionofconsideration; Feesstartat$13,200foracquisitionsof$1millionorless,(c) risingtoamaximumof$1,045,000 for acquisitionsofmorethan$40million

Feetiersincreaseevery$2millionofconsideration; Feesstartat$13,200foracquisitionsof$2millionorless,(c) risingtoamaximumof$1,045,000 for acquisitionsofmorethan$80million

Feetiersincreaseevery$50millionofconsideration; Feesstartat$13,200foracquisitionsof$50millionorless,(c) risingtoamaximumof$1,045,000 for acquisitionsofmorethan$2billion

INTERNAL/EXTERNAL

02 Registeringassets

INTERNAL/EXTERNAL

Previouslaw

RegisterofForeignOwnershipofWaterorAgriculturalLandAct2015

Twoseparateregisterstokeepandreportonannuallytogovernment:

RegisterofForeignOwnershipofAgriculturalland(From1July2015)

RegisterofForeignOwnershipofWaterEntitlements(from30November2017)

Bothrequiredastocktakeasatcommencementdate

Residentialland

Nolawunderpinningthisregister:

WasintendedtobekeptbystatereportingonPropertyTransferDatatoATO

ATOhadtoincludetherequirementtoregisterasaconditionoftheFIRBapproval

Nostocktakeonlyflow

Insightsintoforeignpurchasesandsalesofresidentialland

TheRegisterof ForeignOwnershipof AustralianAssets

Background

The (AmendingAct)introducedintoParliamenton 28October2020andreceivedroyalassenton10December2020.

Schedule3totheAmendingActestablishesthisnewregisterastheRegisterofForeignOwnershipofAustralianAssets(theRegister).

TheRegisteriskeptunderPart7AoftheForeignAcquisitionsandTakeoversAct1975(theFATA).

Thenewprovisionswillcommencebywayofproclamation,or4yearsfromtheAmendingActreceivingroyalassent.Uponcommencement oftheRegister,theexistingRegisterofForeignOwnershipofWaterorAgriculturalLandAct2015willberepealed.

ThenewRegisterwill:

providegovernmentwithabroaddatasettoaidfuturepolicyconsiderations makemoreinformationavailabletodecision-makersapprovingFIRBapplicationsforforeignownershipofspecificassetsinAustralia.

RegistrarappointmentandRegistercommencement

TheCommissionerofTaxationwasappointedastheRegistrarinNovember2022

ThestartdateforthenewRegisterwas1July2023

Penaltiesforfailingtoregisterwithin30days:

Civilpenalty250penaltyunits($275perpenaltyunit)or

Infringementnoticetier1(12penaltyunits)andtier2(60penaltyunits)

Foreignperson(s)-definitions

WhatisaforeignpersonundertheFATA?

IndividualsnotAustraliancitizens,notpermanentresidentvisaholders

Companiesaforeignperson(s)holdsatleast20%interest

Trustsforeignperson(s)andtheirassociatesholdatleast20%beneficialinterestintheincomeor propertyofthetrust(discretionarytrustmeansanyobjectmeetingthedefinitionofaforeign person)

Thebiggestchange

TheATOexpectsthatthebiggestchange toaffectforeigninvestors(foreign persons)andtheiradvisorswillbethe requirementtoregisterallcommercial landacquisitions.

KeyconceptsinPart7A

Australianassetsthatmustberegistered

RegisterNotice

Registerablecircumstancecreatedbysomeregisternotices,requiringfurther registernotices

GivingaregisternoticeOnlineservicesforforeigninvestorswithin30daysof acquiringtheinterest

EXTERNAL-OFFICIAL

Thebiggestchange

TheATOexpectsthatthebiggestchange toaffectforeigninvestors(foreign persons)andtheiradvisorswillbethe requirementtoregisterallcommercial landacquisitions.

Australianassetsinscope

Broadly,scopeoftheRegisterofForeignOwnershipofAustralianAssets(theRegister)is:

a)Non-equitableinterestsinlandandminingandproductiontenements

b)RightsinwaterentitlementsassetoutinthecurrentRegisterofForeignOwnershipofWaterorAgriculturalLandAct2015

c)Non-equitableinterestsinassetssubjecttoactionsthatareappliedfor,notifiedto,orreviewedbytheTreasurerundertheFATA

TheRegisterofForeignOwnershipofAustralianAssets

ThenewRegister(setoutinPart7AoftheFATA)contains:

Theexistingregisters

AgriculturalLand(2015)includingthestocktake

WaterEntitlements(2016)includingthestocktake

ResidentialLand(shiftedtostatute)

Note

Thereisnostocktakefunctionfortheseassets.

TheRegisterwillcollectflowsofthetransactionsand generateanhistoricalviewovertimefortheseasset types.

EXTERNAL-OFFICIAL

Newassetcategories

Land:

Allcommerciallandacquisitions

Miningandproductiontenements

Explorationtenements

Certainbusinessorentityinterestsnotifiedornotifiableunderthe FATA

RequirementstogiveregisternoticesacquiringAustralianland

Alllandacquisitionswillneedtoberegisteredwithin30daysofsettlement

Alllegalinterestsheldbyforeignpersonstoberegistered,regardlessofexemptionsfromotherobligationsundertheFATA

Nosubstantialrulechangeforagriculturalandresidentiallandpurchases

Biggestchangesrequirementtoregistercommerciallandacquisitionsregardlessofvaluefromcommencementdateandallforeignjoint tenantstoregistertheirinterests

Mortgageeinteresttoberegisteredonlyif/whentheyareenforced(subjecttoexpectedRegulationamendment)

Requirementstogiveregisternoticesacquiringotherassets

EntitiesandAssets

Ordinarily,anacquisitionofaninterestinanAustralianentityorBusinesswillonlyneedtobe registerediftheinterestwasnotifiedoraNON/ECwasreceived.Someexceptionsapply.

BroadlyifyourclientisrequiredtoapplyfororvoluntarilyseeksFIRBapprovalthenthethese typesofassettheyareacquiringwillberequiredtogoontheregister.

Whereaforeignpersonsinterestinabusinesschangesby5%ormore,registrationwillbe required.Theregisterableeventdaywillbe30daysfromthedaytheforeignpersonwasawareor oughttohavereasonablybeenawareofthechange.

Thresholdsfor businessesandentities

Theexistingthresholdtestformost Australianentitiesandbusinesseswill apply.i.e.whereaforeignpersonisnot requiredtonotifyundertheFATA,they willgenerallynothaveaobligationto register.Caution,exceptionsdoapply.

Othertypesofregisternotices

Becoming,orceasingtobe,aforeignperson

Ifyoubecomeaforeignpersonwhilstholdingaregisterableinterest,youwillneedtoprovideregister notice.

Conversely,ifyouceasetobeaforeignpersonwhilstholdingtheasset,youwillneedtoprovidea registernotice.

Changeinnatureofinterestinland

Thelandtypechanges

Disposingofaninterest

Upondisposalofaregisterableinterest,aregisternoticewillneedtobegiven

Executors(oradministrator)andliquidators

Upondeathoftheforeignpersonorwindupofthecorporation,therelevantrepresentativeisrequired togivearegisternotice.

Keyconcept-Registered circumstance

Aregisteredcircumstanceisclosely linkedtotheobligationtoprovidea registernotice.Thegivingofa noticecreatestheregistered circumstances,andwherethat circumstanceceases,a correspondingregisternoticeis required.

GivinganoticetotheRegistrar-when

Whencalculatingtheregistrableeventday,youcandisregardtherulesinrespecttowhenyouacquiretheinterestforthepurposeof: Enteringagreementsoroptions(s15)

Offerstoacquireinterestsinassetsofbusiness(s19A(1)(b));and Offerstoacquireinterestsinsecuritiesorrights(s20(1)(b))

Generally,thiswillresultintheregisterableeventdaybeingthedateofsettlement.

Mayinvolveanobjectivetestofassessingwhetheraforeignpersonreasonablyoughttohavebeenawareofachangeintheirinterestwhichis requiredtobenotifiedtotheregistrar(e.g.thetypeoflandchangesfromresidentialtocommercial,becomingaforeignperson),or Forwaterrightinterests,annuallyandtheregisterableeventdaywillinsteadbethelastdayofthefinancialyearinwhichthewaterinterestwas acquired(unchangedfrompreviouslaw)

Fornewbusinesses,theregisterableeventdaywillalignwiththeregistrationofthenewbusinessontheAustralianBusinessRegister.

KeyConceptregisterableeventday

Thedayonwhichtheinterestwasacquiredandusedtocalculate the30dayperiodtogivearegisternotice.

Regulations

PrescribescircumstancesinwhichforeignpersonswillberequiredtoprovideinformationtobeincludedontheRegister. Amendmentstoensureminimisingregulatoryburdenby:

Continuingexistingexemptionsfromsomenotificationobligations Designsaregimetominimiseduplicationofnotifications.

Pointsofinterest:

ForallAustralianland,foreignpersonswhoarejointtenantswillneedtoregistertheir interestinproperty.

Setsoutthatwhereanotificationisrequiredunders98C,DorEoftheFATA,itcannowbe satisfiedbygivingaregisternoticeinsomecircumstances.

Residentiallandusedforretirementvillagesandcertainformsofstudentaccommodation willneedtoberegistered.

Thegeneralexemptionswillcontinuetoapply(Devolutionoflaw,Acquisitionsoflandby personswithcloseconnectionstoAustralia,etc)

Newregulationsarenow inforce:

ForeignAcquisitionsand TakeoversAmendment (RegisterofForeign OwnershipandOtherMatters) Regulations2023

Caution-Theseareyettobe complied.

Onlineservicesfor foreigninvestors

ATOOnlineservicesforforeigninvestors

NewOnlineservices

On26June2023,wearechanginghowyouinteractwithusforyourforeigninvestmentobligations. Fromthisdate,foreigninvestorsandtheirrepresentativeswilluseOnlineservicesforforeigninvestors.Thisnewservicewill:

streamlinehowyoumanageyourregistrationobligations(includingnewobligations)andothertransactionsrelatedtoAustralian investments

beaccessedwithmyGovIDasyourDigitalIdentity.myGovIDusesthesecurityfeaturesinyourdevicetoprotectyouridentityand personalinformation

storeinformationtouseinfutureinteractionswithussoyoudon'thavetoprovidethatinformationagain letyoumanageyourobligationsatatimethatisconvenientforyou supporttheRegisterofForeignOwnershipofAustralianAssets(theRegister).Together,Onlineservicesforforeigninvestorsandthe Registerwillprovideanumberofbenefitsforgovernmentrelatingtodataintegrityandtransparency.

Onlineservicesforforeigninvestors

Whatisit?

Asecure,self-service systemwhichallowsforeign personstomanagetheir Australianassets registrationandother obligationsinoneplace.

Foreignpersonscanuseitto: submitaforeigninvestmentapplicationtobuyresidentialproperty registerapurchaseofallAustralianlandandotherin-scopeAustralianbusinessassets updatedetailsofregisteredAustralianassets(suchasthesaleofanassetontheRegister) submitavacancyfeereturnforresidentialproperty letusknowwheninvestorsontheregisterarenolongerdefinedasaforeignperson undertheForeignAcquisitionsandTakeoversAct authoriseothers,suchasrepresentatives

ATOOnlineservicesforforeigninvestors

What'schanging

ThechangetoOnlineservicesforforeigninvestorsmeans: foreigninvestorsandtheirrepresentativeswillneedamyGovIDwithaBASICidentitystrengthtoaccesstheservice foreigninvestorswillneedtoregisterthemselvestousethisservice,andloginandcompletetheirregistrationbeforetheycan authorisearepresentativetoactontheirbehalf mostformsforeigninvestoruseonthewebsitewillberemovedfrom17June2023.Ifyouhaveobligationssuchasavacancyfeereturn duebetween17and25June,werecommendyoulodgebefore17Juneusingtheformsonourwebsite.

ATOOnlineservicesforforeigninvestors

SetupyourmyGovID

myGovIDisyourpersonalDigitalIdentityandshouldbesetupusingapersonalemailaddress.

MostforeigninvestorsandrepresentativeswillonlyrequireamyGovIDtobesetupwithaBASIC IDENTITYstrength

NodocumentsarerequiredtosetupamyGOVIDwithabasicidentitystrength,only:

Givennameandfamilyname

Dateofbirth

Personalemailaddress

TofindoutmoreaboutmyGovIDandhowtosetup,watchthemyGovID(viostream.com)orgotoHowto setup|myGovID.

ATOOnlineservicesforforeigninvestors

Accessforauthorisedrepresentatives

Ifyouarearepresentativeofaforeigninvestor,toaccessOnlineservicesforforeigninvestorsontheir behalftheforeigninvestorwill:

setuptheirownaccesstoOnlineservicesforforeigninvestorsandlogintocompleteaone-off registrationyoucan'tsetupaccessontheirbehalf.

authoriseyouraccesstoauthoriseyouraccesstheywillneed yourfullnameusedtosetupyourmyGovID anemailaddressthatcanonlybeaccessedbyyou.

Ourwebsitewillhavemoreinformationabouttheauthorisationprocessfrom26June2023.

IfyouwouldliketoattendanupcomingwebinarabouttheRegisteror Onlineservicesforforeigninvestorspleaseregisteryourinterestby emailing:

References

Onlineservicesforforeigninvestors|AustralianTaxationOffice(ato.gov.au)

RegisterofForeignOwnershipofAustralianAssets|AustralianTaxationOffice(ato.gov.au)

ForeignInvestmentStakeholderGroup|AustralianTaxationOffice(ato.gov.au)

Home|ForeignInvestmentReviewBoard(firb.gov.au)

Guidancenotes|ForeignInvestmentReviewBoard(firb.gov.au)

ForeigninvestmentinAustralia|AustralianTaxationOffice(ato.gov.au)

Registerofforeignownershipofagriculturalland(firb.gov.au)

Registerofforeignownershipofwaterentitlements-Reportofregistrationsasat30June2021(firb.gov.au)

Emailourstakeholderengagementteam:FIRBATOCOMMS@ato.gov.au

Emailourlaw&policyteam:FIRBLaw&Policy@ato.gov.au