Foreign investment penalty fees set to double
On 8 September 2022, the Federal Government introduced the Treasury Laws Amendment (2022 Measures No 3) Bill 2022 (Cth) (Amendment Bill) which will, if enacted, operate to double the financial penalties for breaches of residential land provisions under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA).
Background
In July 2022, Australia saw application fees payable under the FATA double by amendment to the Foreign Acquisition and Takeovers Fees Imposition Act 2015 (Cth). For more information, please see our previous article here.
In line with the application fee hike, the Amendment Bill is set to double the maximum financial penalties for breaches of provisions under the FATA that relate solely to residential land. The Federal Government is hopeful that the increased penalty regime will encourage compliance with the foreign investment framework.
Summary of fee changes
The below table outlines a summary of new penalties payable for contraventions of the FATA regime.
| Provision | New Penalty | Date of Application |
|---|---|---|
| A developer failing to advertise a new dwelling in Australia in breach of its exemption certificate: s 88. | Either or both:
for corporations: 300,000 penalty units (~$66.6 million). |
Applicable to contraventions which occur after 1 January 2023. |
| Failing to notify the Treasurer of an acquisition, holding prohibited interests in established dwellings, or breaching conditions or a national security review notice: ss 94, 95, 95A or s 96. | The greatest of:
50% of the market value of the interest in the land/dwelling. |
Applicable to contraventions which occur after 1 January 2023 (except in respect of any contraventions of ss 95 (a foreign person who is a temporary resident holding more than one established dwelling at the same time) which occur prior to 1 January 2023 and thereafter, for which the new penalty will apply). |
| Failing to comply with notice or vacancy fee return requirements: ss 97, 115D, 115DA and 115G. | 500 penalty units ($111,000). | Applicable to contraventions which occur after 1 January 2023. |
The explanatory memorandum to the Amendment Bill notes that maintaining strong compliance with Australia’s foreign investment framework is a priority for the Federal Government as non-compliance may have a significant impact on Australia’s housing stock and housing affordability.
Indexation related increases
In addition to the Amendment Bill, the Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2022 (Cth) will update the maximum fees payable under FATA to $1,045,000 (from $1,000,000). The increase incorporates indexation to date, with further amendments to apply from 1 July 2023.
For more information, please view the bill here and the explanatory memorandum here.
Queries
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Disclaimer
This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.