22 October 2015

Earlier this year the Australian Government announced reductions in penalties for foreign investors who disclose breaches of Australia’s foreign investment rules for purchases of Australian residential real estate. This offer will come to an end on 30th November 2015.

The reduced penalty period (RPP) follows the passing of a series of Bills by Federal Parliament which aims to tighten Australia’s foreign investment framework.

 

Reduced Penalties

If you voluntarily disclose a breach of the rules for residential real estate purchases before 30 November 2015 you may:

  • be given 12 months to sell the property, rather than a shorter period
  • not be referred for criminal prosecution.

 

Penalties post deadline

From 1 December 2015, tougher new criminal, civil penalties and infringement notices be introduced for individuals and companies. These penalties will also be extended to third parties (such as lawyers, accountants and real estate agents) who knowingly assist breaches. Increased penalties include*:

  • Up to $135,000 or three years imprisonment for individuals
  • Up to $675,000 for companies
  • Up to $45,000 for third party individuals
  • Up to $225,000 for third party companies

 

ATO’s Compliance Approach

As outlined in our September Financial Clarity, the ATO has commenced its extensive data matching program to detect non-compliance and fraud associated with the visa holding population.

The collected information will be used to actively pursue and penalise those found to have undertaken illegal activity in Australia, including undertaking non-compliant investments.

 

How to disclose

To take advantage of the reduced penalty, investors (or their representatives) must complete the reduced penalty disclosure form. Up to three properties can be reported on a form and documents can be attached.

The form requires details including:

  • owner’s name, address, contact details and passport information
  • property address, type, ownership details and a contract of sale, and
  • company or trust details where applicable

 

How to report a breach

If you have information about a possible breach of Australia’s foreign investment rules, you can report your concerns by completing the foreign investment breach reporting form. You can remain anonymous when reporting a breach.

 

Need help?

With many years experience working with foreign investors and migrants our team is well positioned to assist with taxation and investment matters for foreign people entering, or who have entered, Australia. If you would like to discuss your circumstances with us, please do not hesitate to email us or call on +61 7 3391 5055.

For more information about the RPP or other foreign investment matters, please visit the Foreign Investment Review Board website.

*Foreign Investment Reforms Factsheet: Residential real estate, 2015

Disclaimer: This publication contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.