Treasurer Scott Morrison has ordered the divestment of a further 16 Australian residential properties that have been held by foreign nationals in breach of the foreign investment framework, taking the total purchase price of Australian residential real estate divested to more than $92 million.
“The divestments of these 16 properties, which have a combined purchase price of over $14 million, are further evidence of the Turnbull government’s commitment to enforcing our rules so that foreign nationals illegally holding Australian property are identified and their illegal holdings relinquished,” Morrison says.
“Foreign investment provides significant benefits for Australia but we must also ensure that such investment benefits all Australians, is in line with our rules and is not contrary to our national interest.”
The 16 properties were in Victoria, New South Wales, Queensland and Western Australia, with prices ranging from approximately $200,000 to $2 million. The individuals involved come from a range of countries including the United Kingdom, Malaysia, China and Canada.
“The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,” Morrison explains.
“Since taking office in 2013, the Coalition government has forced foreign nationals to divest a total of 46 properties. Under the previous Labor government, no foreign nationals were forced to divest illegally-held Australian property.
“These divestments are a reminder that the Coalition government’s increased compliance measures, which include transferring responsibility for residential real estate enforcement to the Australian Taxation Office (ATO), are working to ensure our foreign investment rules are being enforced.”
Since the transfer of responsibility to the ATO for compliance in May 2015, more than 2200 matters have been referred for investigation. Through information provided by the public, together with the ATO’s own enquiries, approximately 400 cases remain under active investigation.
“Since a new penalty regime was introduced from 1 December last year, 179 penalty notices have been issued, totaling over $900,000,” Morrison adds.
“Penalty notices have been issued to people who have failed to obtain FIRB approval before buying property as well as for breaching a condition of previously approved applications.
“Illegal real estate purchases by foreign citizens attract criminal penalties of up to $135,000 or three years’ imprisonment, or both for individuals; and up to $675,000 for companies. The new rules also allow capital gains made on illegal investments to be forfeited.”
Along with the divestments, a number of people came forward during the reduced penalty period who weren’t in breach and some who voluntarily sold their properties while the ATO was examining their case.
“While Australia welcomes foreign investment, foreign investors must comply with our laws,” Morrison says.