EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 104
Issued by the authority of the Assistant Treasurer
Foreign Acquisitions and Takeovers Act 1975
Foreign Acquisitions and Takeovers Amendment Regulations 2010 (No. 2)
Section 39 of the Foreign Acquisitions and Takeovers Act 1975 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act provides the legislative underpinning for the Australian Government’s (the Government’s) foreign investment screening regime to ensure that foreign investment in Australia is not contrary to the national interest. It provides that the Treasurer may prohibit certain acquisitions that he decides would be contrary to the national interest (sections 18, 19, 20, 21 and 21A refer). Section 26A makes it compulsory for a foreign person to notify the Treasurer of a proposal to acquire or increase an ‘interest’ in Australian urban land unless the acquisition is exempt under the regulations. Subsection 12A(8) specifies that the regulations may provide that the Act does not apply to certain ‘interests’ in Australian urban land.
An ‘interest’ in Australian urban land includes buying real estate, obtaining or agreeing to enter into a lease, or financing or profit sharing arrangements. Regardless of value, foreign persons generally need to notify the Government to take an interest in residential real estate, vacant land or to buy shares or units in Australian urban land corporations or trust estates.
The Foreign Acquisitions and Takeovers Regulations 1989 (the Principal Regulations) generally establish classes of exemptions. Paragraph 3(w) of the Principal Regulations exempts certain temporary residents from the need to notify the Government before buying the following residential real estate:
• single blocks of vacant land;
• new dwellings; and/or
• an established/second hand dwelling to be used as principal place of residence.
Under regulation 2 of the Principal Regulations, a temporary resident is defined as a person who resides in Australia and:
• holds a temporary visa which permits the person to stay in Australia for a continuous period of more than 12 months (regardless of how long remains on the visa); or
• has submitted an application for permanent residency and holds a bridging visa which permits the person to stay in Australia until that application has been finalised.
The Regulations amend the Principal Regulations to remove this general exemption and require all temporary residents to notify the Government for any proposed residential real estate acquisition. The Regulations ensure that the Government can monitor investment in Australian real estate by temporary residents to ensure that they do not place undue pressure on established house prices.
The Regulations remove the temporary resident exemption in paragraph 3(w). This ensures that temporary residents need to notify the Treasurer before buying residential real estate in Australia.
Upon receipt of a notice, the Treasurer may allow the proposal to proceed, or he may object to the proposal if he considers it to be contrary to the national interest, or he may impose conditions to ensure that the proposal may proceed in a form that would not be contrary to the national interest.
The Regulations also make a minor technical correction to the punctuation in sub‑subparagraph 3(v)(iv)(B) to accommodate the removal of paragraph 3(w).
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Foreign Acquisitions and Takeovers Amendment Regulations 2010 (No. 2) were enacted to amend the Foreign Acquisitions and Takeovers Regulations 1989, addressing a gap in the screening regime by ensuring that temporary residents must notify the Government before acquiring residential real estate in Australia. This legislative instrument was issued under the authority of the Assistant Treasurer and aims to provide a comprehensive oversight of foreign investment in Australian urban land. The policy objective behind this amendment is to ensure that investments in residential real estate by temporary residents do not exert undue pressure on established house prices and to maintain alignment with national interests as outlined in the Foreign Acquisitions and Takeovers Act 1975. By requiring all temporary residents to notify the Treasurer of their proposed acquisitions, the government can better monitor and regulate such transactions to safeguard the national interest.
Scope and Application
The Foreign Acquisitions and Takeovers Amendment Regulations 2010 (No. 2) modify the existing Foreign Acquisitions and Takeovers Regulations 1989, extending the scope of the Foreign Acquisitions and Takeovers Act 1975 to ensure greater oversight of foreign investment in Australia. The Act applies to foreign persons and entities seeking to acquire or increase an interest in Australian urban land, including through the purchase of real estate, entering into leases, or other forms of financial involvement. The Regulations target temporary residents who must now notify the Treasurer of any proposed acquisition of residential real estate, removing an exemption previously afforded to such residents. This change ensures that the Government can scrutinise and manage investments by temporary residents to mitigate any undue impact on the housing market. The Regulations apply nationally, across all states and territories, and come into effect upon registration on the Federal Register of Legislative Instruments. These amendments reflect the Commonwealth's commitment to protecting national interests by monitoring and regulating foreign investment more comprehensively.
Key Provisions
The Foreign Acquisitions and Takeovers Amendment Regulations 2010 (No. 2) amend the Foreign Acquisitions and Takeovers Regulations 1989 by removing a general exemption for temporary residents from the requirement to notify the Government of a proposed acquisition of Australian urban land (section 2). Specifically, the Regulations remove the exemption in paragraph 3(w) of the Principal Regulations, which previously allowed temporary residents to purchase certain residential real estate without notifying the Government. This amendment means that all temporary residents must now notify the Treasurer before buying residential real estate in Australia, regardless of the type of property or the duration of their stay (regulation 2).
The Regulations impose an obligation on temporary residents to notify the Treasurer of any proposed acquisition of Australian urban land (section 2). A temporary resident is defined as someone who resides in Australia and holds a temporary visa permitting a continuous stay of more than 12 months, or who holds a bridging visa while awaiting a decision on a permanent residency application (regulation 2). By requiring this notification, the Government can better monitor and assess the impact of foreign investment in Australian real estate, particularly by temporary residents, to ensure it does not unduly affect housing prices or the national interest.
Failure to comply with the notification requirements can lead to civil and criminal consequences. Under section 128 of the Foreign Acquisitions and Takeovers Act 1975, any person who contravenes a requirement to notify the Treasurer of a proposed acquisition may be liable to a penalty. The maximum penalty for an individual is 10,000 penalty units, while the maximum penalty for a body corporate is 100,000 penalty units. Additionally, under section 130, a person who contravenes a requirement to obtain approval before proceeding with a notifiable action may also face criminal penalties, including fines and imprisonment. The specific penalties depend on the nature and severity of the breach, with the potential for significant fines and jail time for serious or repeated violations.