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4 Changes Foreign Investors Need To Know About Purchasing Property in Australia

Anfernee Lai Perth, ATO Investigation, Blog & Articles, FIRB, FIRB Investigation, Foreign Investment Review Board, Property Investment, Tang Legal

The total value of foreign investment in Australia stood at $2.8 trillion at the end of 2014

(Statistic obtained from the Department of Foreign Affairs and Trade)

WHAT ARE THE RECENT CHANGES?

The current Government has introduced various changes to the foreign investment rules and the important ones include:
  1. Tougher penalties for foreigner who breached the rules relating to purchase of residential real estate – e.g. the existing criminal penalties have been increased to $135,000 or 3 years imprisonment or both for individual foreign citizens who breached the law;
  2. Although acquisition of agricultural land holdings are generally not required to be approved by the Foreign Investment Review Board (FIRB), Foreign-owned agricultural land holdings are required to be registered with the Australian Taxation Office’s newly established Agricultural Land Register;
  3. Introduction of an application fee for obtaining FIRB approval – e.g. $5,000 fee for obtaining approval for buying residential land where the price is $1 million; $10,000 fee for obtaining approval for buying residential land where the price is over $1 million and less than $2 million;
  4. Stronger enforcement process – the ATO has now taken over full responsibility for enforcing residential real estate purchases by foreign citizens. 

The recent changes are aimed to have stronger, more effective and more enforceable rules regarding foreign investment. The days where people thought that their breach of the foreign investment laws would never be caught are gone and every foreign citizen must carefully consider the legality of their intended purchase of assets in Australia.

THINGS TO CONSIDER WHEN BUYING RESIDENTIAL PROPERTY

Australia has a long established policy to strictly regulate the purchase of established houses by foreigners in order to maintain sufficient housing supply to its residents.

 

If you are a non-resident foreign person, you should consider the following general rules before buying any residential property:
·         you are prohibited from buying established dwellings(2nd hand house) in Australia;
·      you will need to apply and receive FIRB approval before buying new dwellings (e.g. newly developed apartment) and usually approval will be granted without any condition;
·        you will need to apply and receive FIRB approval before buying vacant residential land for development and usually approval will only be granted under the condition that you must develop the land within certain period of time.

 

 

THINGS TO CONSIDER WHEN BUYING COMMERCIAL/AGRICULTURAL PROPERTY

Whether a non-resident foreign person requires to notify FIRB prior to buying a commercial property depends on if the commercial land is vacant or developed. If the commercial land is vacant (no substantive permanent building on the land), FIRB notification is required. If the commercial land is developed(there is substantive permanent building on the land used for commercial purpose), foreign persons generally do not need to notify FIRB prior to the purchase unless the land is valued more than $252 million.
 
If a non-resident foreign person propose to buy an agricultural land, generally approval from FIRB is not required if the agricultural land valued less than $15 million. Agricultural land means land that is used wholly and exclusively for a primary production business. It is important to understand that “hobby farms” are not considered to be agricultural land and approval from FIRB will be required.


THINGS TO CONSIDER WHEN BUYING BUSINESS ASSETS

Australia usually encourages foreign investment into its business sector and therefore rules regulating business acquisition by foreigners is less stringent than rules regulating purchase of residential properties.
Generally, foreign persons (except foreign government investors) can buy business assets in Australia without approval if the interest to be acquired valued at less than $252 million. If the business is an “agribusiness” then approval is generally not required if the value of the investment is less than $55 million. Agribusiness includes industries such as agriculture, forestry, fishing, meat processing, poultry processing, dairy product manufacturing, grain mill product manufacturing, sugar manufacturing etc.
 

 

Finally, if you are a non-resident foreign person and you have any doubts about your proposed purchase of assets in Australia, you should seek legal advice before signing any contract because fail to comply with the foreign investment laws may result in very severe penalties (including imprisonment) being imposed against you.  
 

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About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.
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Case Study: How Our Lawyers Handle Commercial Disputes At Your Best Interest?

Anfernee Lai Perth, Blog & Articles, Civil Litigation, Commercial Disputes; Business Disputes Perth, Litigation, Partnership Disputes, Shareholder Disputes, Tang Law, Tang Legal

These cases studies are based on real life situations, client names and images may have been changed to protect privacy. Each case study generally represents the experiences clients will have, however, each client has their own subjective goals and requirements to suit those specific goals and requirements. Thus, these case studies may not be deemed to create any warranty or representation that any other clients’ experience will be the same as the experience identified herein.

Genuine Story

Mr Chan was a successful entrepreneur in China who entered into joint venture agreements with Mr Smith with respect to property developments in Western Australia.

After the first project, Mr Smith invited Mr Chan to roll over his capital and profits, in excess of $1 million, from the first project into a second property development project.
After the second project, from which multi-millions of profits were made, Mr Smith again invited Mr Chan to roll over all his monies in the project into a third property development project. Mr Chan disagreed and requested to have his capital and profits from the projects returned to him.

Mr Smith refused. To the surprise of Mr Chan, Mr Smith secretly removed Mr Chan as a director of the company as well as issued more shares to himself.

 

Mr Chan engaged our firm to assist him to recover his capital and the agreed profits. Over the years, Mr Chen has invested approximately $1.2 million into the projects.

Solution

We were instructed by Mr Chan to commence proceedings in the Supreme Court against Mr Smith to recover his capital and the agreed profits.
Simultaneously, we assisted Mr Chan to successfully obtain a Freezing Order against Mr Smith which prevented Mr Smith from disbursing his personal assets as well as assets (including substantial amount of cash) held by the company.
Mr Chan and Mr Smith were unable to reach an out of court settlement and the dispute had to be determined by the Supreme Court after a 10 days trial.

Outcome

Mr Chan was successful in obtaining judgments from the Supreme Court in his favour for a sum in excess of $3.1 million plus recovering $300,000 in legal costs.

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.
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divorce

What To Do When You Divorce?

Anfernee Lai Perth, Blog & Articles, Child Support, Divorce, Family Court, Family Court Case, Family Disputes, Family Law, Family Law Perth, Tang Legal
WHAT TO DO WHEN YOU DIVORCE?
46,498 divorces granted in Australia in 2014
(Statistic obtained from the Australian Bureau of Statistics, 3310.0 – Marriages and Divorces, Australia 2014)

DID YOU KNOW?

Almost 1 out of 3 marriages would result in divorce and the median duration from marriage to divorce is about 12 years.

The statistic may sound depressing but the reality is that you or one of your friends may one day need to face the prospect of divorce and it is helpful to equip yourself with some knowledge about that process.

HOW TO APPLY FOR DIVORCE?

In Australia, we have adopted the principle of no-fault divorce. This means that the court does not require to consider which partner was at fault in a marriage breakdown. In order to apply for divorce, you will only need to prove an irretrievable breakdown of the relationship which is demonstrated by 12 months of separation.
Once you have been separated for more than 12 months, you can apply for a divorce through the Family Court by filing an Application for Divorce (Form 3). You do not need the consent of your partner to apply for divorce. Generally, you are not required to physically attend court.
You may apply for a divorce in Australia even if you were married overseas, as long as you or your partner meets certain requirements.
It is important to understand that divorce application does not resolve children and financial matters.

WHAT WILL HAPPEN TO OUR ASSETS?

First of all, there is NO automatic split of assets on a 50/50 basis and each case is different.
If you and your partner cannot reach an agreement regarding property division, the decision will have to be made by the court. In doing so, the court will adopt a 4 steps process:
        Step 1: Identify and determine the net value of all properties
      Step 2: Assess the contributions (including financial contribution, non-financial contribution and contributions to the welfare of the family) made by each partner and divide the assets according to the contributions
Step 3: Identify the respective needs of the partners by taking into account factors such as age, health, income, earning capacity and number of dependents and adjust the assets division accordingly
Step 4: Determine whether the resulting division is “just and equitable” and determine the final assets division
Whilst you cannot make an application for divorce until 12 months after separation, you do not need to wait for any period before you are entitled to have the assets divided between you and your partner. 

WHAT ABOUT OUR CHILDREN?

If you and your partner cannot reach an agreement about your children, similarly, the decision will have to be made by the court.
In Australia, the term “child custody” is no longer used. Instead, it is referred to as parental responsibility.  In deciding whether to make a particular parenting order in relation to a child, the court must regard the best interests of the child as the paramount consideration. In deciding what is in the best interests of the child, the primary considerations are the benefit to the child of having a meaningful relationship with both parents and the need to protect the child from physical or psychological harm.
In addition, the Court will also consider other factors including views expressed by the child, the child’s relationship with other persons (e.g. grandparents and siblings), the likely effect of any changes in the child’s circumstances, the child’s background, the child’s attitude and any family violence.
The types of parenting orders you may seek from the court include:
·         who a child live with;
·         who  a child will spend time with;
·         who a child will communicate with;
·         whether you can take the child to overseas holiday; or
·         who has responsibility for major decision about the child.

SO WHAT SHOULD I DO WHEN DIVORCE IS IMMINENT?

It is undoubtedly a very stressful experience for anyone to have to go through separation of relationship. The first thing you should do is to calm down and don’t allow your emotions to get in the way of rational thinking. You need to understand that most family law disputes can be resolved amicably without determination by the court. Once you are ready, you should, at the earliest opportunity, obtain legal and financial advice about your rights and financial standings as a result of the separation.

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing family law advice to clients, making divorce applications and applying for Consent Order. Kelvin is able to offer his clients clear and practical advice in relation to children’s disputes, property settlements between married and de-facto couples, spousal maintenance and child support.