Joe Hockey recently revealed that there are currently 195 cases under investigation by the Foreign Investment Review Board (“FIRB”). Approximately 24 of these cases have involved a foreign investor that has voluntarily come forward to indicate that they may have breached the foreign investment rules. Another 40 of these cases relate to referrals made by the public where they suspect that foreign investors have been hiding behind complex structures and illegal leasing arrangements in an attempt to hide foreign ownership.
The government has recommended that foreign investors that think they may have breached the current legislation should come forward and make the necessary voluntary disclosures to the government.
Current legislation allows foreign investors to purchase existing property if:
- they are a temporary resident and wish to use the property as their residence in Australia. However, these types of applications are usually subject to the following conditions:
- The property is vacant at settlement;
- The property must be used as your principle place of residence;
- No part of the property may be rented; and
- You must sell the property once you no longer live in the property
- they wish to redevelop the property. A redevelopment does not include the refurbishment of an existing dwelling. The success of this type of application is subject to the following:
- the existing residence cannot be rented out prior to the redevelopment
- the existing dwelling must be demolished and continuous substantial construction of the new dwelling must start within 24 months
The rules have been strengthened to deter any future foreign investor from breaching the rules. From 1 December 2015, foreign residents who unlawfully purchase an established residential property will be liable to penalties of up to $127,500 or 3 years imprisonment for individuals and up to $637,500 for companies.
Also, individuals who knowingly assist foreign investor breach legislation will be liable to penalties including fines of $45,000 for individuals and $225,000 for companies.
If you require any further information or need help in this regard, please do not hesitate to contact The Quinn Group on (02) 9223 9166 or submit an online enquiry.