FOREIGN INVESTMENT POLICY CHANGES
The Government has announced a number of changes to foreign investment policy. These
follow from the outcome of the Joint Prime Ministerial Task Force on Australia New Zealand
Bilateral Relations. In addition, a number of policy and administrative changes will be
made following a review of foreign investment policy that formed part of the
Governments schedule of reviews of legislation imposing costs on business.
The changes will reduce notification obligations on business and streamline the
administration of foreign investment policy, while continuing to ensure that foreign
investment is consistent with the interests of the Australian public.
The Prime Minister announced on 4 August 1999, that Australia will increase the
acquisition threshold for foreign investment in existing businesses to $A50 million on a
multilateral basis, as well as remove approval requirements for special category visa
holders investing in residential real estate through Australian based companies and
trusts. Consistent with these measures, the Government will also increase to $50 million
the voluntary notification threshold for the Australian assets of an offshore company to
be acquired by another offshore company. In addition acquisitions of residential property
by Australian permanent resident visa holders, not ordinarily resident in Australia,
purchasing through Australian companies or trusts will be exempt from notification.
Other modifications to foreign investment policy will be made in the following areas:
- the treatment of vacant land and housing packages;
- treatment of developed non-residential commercial property;
- the designation of integrated tourism resorts;
- the sale of strata titled hotel accommodation;
- Australian citizens and their foreign spouses purchasing as joint tenants; and,
- foreign trustees acquisition of interests in urban land.
Details of all the changes are attached.
3 September 1999
|Contact Officer: Janine Murphy
Foreign Investment Policy Division
Treasury (02) 6263 3763
|Contact Officer: Vernon Joice
Foreign Investment Policy Division
Treasury (02) 6263 3834
Proposed Changes to Foreign Investment Policy
The Prime Ministers statement of 4 August 1999 announced that Australia would:
- increase the notification threshold for foreign investment in existing businesses from
$5 million ($3 million for rural businesses) to $50 million;
- remove foreign investment approval requirements for individuals, who hold or are
entitled to hold a special category visa and invest in Australian residential real estate
through Australian companies and trusts; and
- increase the limit for which applications for investment in businesses are registered
but are generally not fully examined from $50 million to $100 million.
Consistent with measures (a) and (b) above, the Government has also decided:
- to increase the voluntary notification threshold to $50 million (from $20 million)
for the Australian assets of an offshore company to be acquired by another offshore
- to exempt acquisitions of residential real estate by Australian permanent resident visa
holders, not ordinarily resident in Australia, purchasing through Australian companies or
In addition the following modifications to policy are planned:
Treatment of vacant land and house packages
- The acquisition of house and land packages, "off-the-plan" ie, where
construction has not commenced, will no longer be limited to 50 per cent of the
projects sales. Consistent with the policy applied to purchases of vacant land for
development, approval will be conditional on continuous construction of the relevant
dwelling commencing within 12 months.
Treatment of developed non-residential commercial properties
- Where properties are not subject to heritage listing, the notification threshold
applying to the acquisition of developed non-residential (ie, it is not an accommodation
facility) commercial properties will be raised from $5 million to $50 million.
- In addition, acquisitions of developed non-residential commercial properties, valued
between the notification threshold and $100 million, will no longer be subject to detailed
examination, unless the facts of the proposal raise issues pertaining to the national
Integrated Tourism Resorts
- The policy of designating Integrated Tourism Resorts (ITRs), within which foreign
persons are permitted to acquire residential property without restriction, will only apply
to developed residential property which is leased back to the resort operator to be
available for tourist accommodation when not occupied by the owner. Owners of residential
property in existing ITRs will retain their current entitlements.
Strata titled hotel accommodation
- Sales will be permitted to foreign interests of strata-titled hotel rooms in designated
hotels where each room is subject to a long-term (10 years or more) hotel management
- The hotel management agreement must limit the owners rights to an income stream,
not occupancy. The management must retain ownership of the common property. In addition,
owners will not have the right to opt out of the management agreement. The hotel must
provide a full range of facilities consistent with industry accepted hotel features.
Australian citizens and foreign spouses
- Australian citizens and their foreign spouses purchasing as joint tenants will no longer
be required to seek approval for purchases of residential property in Australia.
Foreign trustees acquisition of interests in urban land
- Exemption will be given for the acquisition of interests in Australian urban land by
foreign-owned responsible entities acting on behalf of managed unit trusts and other
managed public investment schemes registered under Chapter 5C of the Corporations Law,
where they are investing for the benefit of fund investors or unit holders ordinarily
resident in Australia. This is consistent with the rules applying to foreign-owned life
insurers and superannuation funds.
All the planned changes will take effect from the promulgation of amendments to the
Foreign Acquisitions and Takeovers Regulations that are necessary to implement some of the
Revised foreign investment policy summaries will be released once the new regulations