Compliance Issues

The Government takes very seriously breaches of policy and legislation regarding inward foreign investment.

Within the Executive of the Foreign Investment Review Board (FIRB), the Compliance Unit is responsible for a two-pronged program. The program aims to maximise the level of compliance (ie ensuring prior approval is sought) through:

• Increasing public awareness of the policy requirements. This involves (close co-operation) with a number of professionals and organisations, such as solicitors, financial institutions and real estate agents; and
• Investigating allegations of possible non-compliance, and sample checking property transactions. This involves co-operation with relevant state authorities (land registries) and federal government immigration and police authorities.

The second element of the program involves monitoring of conditions placed on proposals approved under the Government's foreign investment policy. This is particularly focussed on the real estate sector. In cases of non-compliance with conditions, legislation provides for severe penalties and further, details of the breach will be provided to the Department of Immigration and Multicultural and Indigenous Affairs for action as they deem necessary. In some cases, details may also be given to the Australian Taxation Office and the Australian Federal Police.

Compliance Activities

The Treasurer has a wide range of powers under The Foreign Acquisitions and Takeovers Act 1975 (the Act) to:

• prosecute persons and companies who fail to obtain prior approval to buy assets, shares or property. Penalties can include forced sale, fines or imprisonment.
• prosecute persons and companies who fail to comply with an order to sell shares, assets or property. Similar penalties may be applied.

There are a number of processes that assist in ensuring compliance with policy:

• Information on Australia's foreign investment policy is disseminated directly by the FIRB through publications, public presentations and in response to enquiries. In addition, information is provided by other government departments, such as the Department of Immigration and Multicultural and Indigenous Affairs to applicants seeking temporary resident visas.
• In purchasing property, foreign persons may deal with a number of professionals and organisations, such as solicitors, financial institutions and real estate agents, who have an interest in ensuring that foreign purchasers have information on the need to comply with foreign investment policy.
• All allegations of possible non-compliance are fully investigated.
• Ongoing sample checks on compliance are undertaken by the FIRB Executive.

There are also general powers that make it an offence to provide false or misleading information, or to enter into any schemes for the purpose of avoiding the provisions of the Act.

The Treasurer has the power to serve a notice in writing requiring a person capable of giving information or producing documents relevant to the exercise of the Act to supply the information within a specified time.

Monitoring Activities

Monitoring of compliance with foreign investment policy continues to be a significant activity, particularly in the real estate sector. The Government's foreign investment policy seeks to channel foreign investment in the housing sector into activities that directly increase the supply of new housing.

Therefore under policy, the purchase of already established residential real estate by foreign interests is very restricted. Also, where foreign interests acquire residential real estate for development, the Government seeks to ensure that any stated development is carried out within a reasonable time (ie, a requirement to commence continuous construction within 12 months).

• There is a reporting requirement placed on approvals to improve compliance with conditions imposed, for example on real estate for development.

Any failure by foreign interests to pursue stated development plans is considered to be a breach of the Act. A foreign interest found to be in breach may be ordered to sell the subject property and this may result in a significant capital loss for the purchaser and/or penalties by way of a prosecution for an offence under the Act. There are possible financial penalties and/or imprisonment on conviction.

In examining proposals the applicant's compliance with any conditions relating to past proposals is taken into account. Instances of lack of compliance with conditions may result in present and future proposals not being approved.

Contact Details

Compliance Unit staff are available to discuss in strict confidence any matter which persons may wish to raise formally or informally.

For compliance matters telephone the general inquiry number on +61 2 6263 3795 (9:00 am – 12:30 pm and 1:30 pm – 5:00 pm AEST, Monday to Friday, excluding public holidays and the period between 25 December and 2 January) or send an e-mail to firbenquiries@treasury.gov.au.