The Register of Foreign Ownership of Australian Assets (Register), recently announced by the Australian Tax Office (ATO), commenced on 1 July 2023, as well as the introduction of new Online Services for foreign investors. The Register is projected to expand upon the existing registers for water, agricultural and residential land across Australia.
Background
The Register imposes a variety of enhanced reporting obligations for foreign investors, in addition to the existing obligations under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (Act), in relation to certain interests in Australian land, entities and businesses.
The Register is contained in Part 7A of the Act, which was introduced as part of the foreign investment reforms which commenced on 1 January 2021, but is only now coming into effective operation with the aim of increasing visibility over foreign investment in Australia and accurate reporting to the Government regarding foreign ownership.
As part of the changes, the existing water, agricultural and residential land registers will be replaced by the Register. The Register will be administered by the ATO and will expand the types of assets which must be registered including new categories of commercial land, certain business interests, tenements, and securities in mining.
Register requirements
A foreign person will be required to give notice (a “register notice”) to the Registrar of certain events relating to interests in Australian land (including certain leasehold and mining interests), businesses or entities, including where the foreign person takes an action which is a notifiable action or significant action, a national security action or a reviewable national security action (if not covered by an exemption certificate). Along with acquisition of interests in Australian assets, this will include where:
- a person becomes a foreign person whilst holding a registrable interest;
- the nature of a registrable asset changes, for example where:
- agricultural land becomes commercial land;
- the volume of a registrable water interest changes;
- a foreign person increases or decreases their interest in a business or entity by more than 5% (including a divestment of an asset); or
- a foreign person ceases to be a foreign person whilst holding a registrable interest.
Distinction from FIRB application process
The obligation to apply for confirmation of no objections (commonly referred to as “FIRB approval”) from the Foreign Investment Review Board (FIRB) for proposed significant actions, notifiable actions, notifiable national security actions and reviewable national security actions (prior to them being taken), will not be affected by the introduction of the Register. Rather, foreign investors will need to report transactions after they have been taken. It is important to note that where an action does not require FIRB approval, it may still require notification to the Register.
How and when to notify Registrar
Where notice is required to be given to the Registrar, the notice must be given within 30 days of the event. Foreign persons will be required to notify the Registrar online via the online services for foreign investors platform.
Will the Register be public?
The Register will not be a public register, however, the Registrar may disclose information on the Register to other Government departments in order to exercise its powers under the Act.
Penalties for non-compliance
If a foreign person fails to comply with any of the above registration obligations, a civil penalty of up to 250 penalty units may be imposed, which, as at the date of writing, equates to a fine of $68,750.
Going forward
Given the increased compliance burden for foreign persons, we recommend that foreign persons and foreign-owned businesses become familiar with the new reporting requirements to ensure all interests are kept up-to-date with the Register, and to avoid incurring any significant penalties for non-compliance.
We are here to help
If you would like to discuss how the new regulations might affect your reporting requirements, please contact Rohan Harris, Rory Maguire, Ellen O’Neil, Amity Jarvis or Jake Veale from our Corporate & Commercial Advisory team.
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