EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Register of Foreign Ownership of Agricultural Land Act 2015
Register of Foreign Ownership of Agricultural Land Rule 2015
Section 35 of the Register of Foreign Ownership of Agricultural Land Act 2015 (Act) provides that the Minister may, by legislative instrument, make rules 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. Also, section 5 of the Act enables rules to be made that specify that land of a kind is not agricultural land for the purposes of the Act and section 30 enables rules to exempt persons from requirements to give notice.
The Act requires the Commissioner of Taxation to keep a Register of Foreign Ownership of Agricultural Land (Register). The Register will contain a record of foreign persons with interests in agricultural land in Australia. The Act also provides for the collection of information, and the publication of statistics, about foreign interests in agricultural land in Australia. The overarching purpose of the Register is to provide increased transparency on the level of foreign ownership of agricultural land in Australia.
The primary purpose of the Register of Foreign Ownership of Agricultural Land Rule 2015 (Rule) is to specify that certain land is not agricultural land for the purposes of the Act. The kind of land which is specified not to be agricultural land is the same as the land which is specified not to be agricultural land by the Foreign Acquisitions and Takeovers Regulation 2015 (Regulation). The Rule also provides an exemption from Part 3 of the Act for persons holding freehold interests in agricultural land or interests in certain leases or licences in agricultural land that the person has acquired by way of enforcement of a security held solely for the purposes of a money lending agreement.
Further details of the Rule are set out in Attachment A.
The Statement of Compatibility is set out in Attachment B.
The Rule is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
While the Department of the Treasury (Treasury) did not release an exposure draft of the Rule for public comment, it did release an exposure draft of the Regulation, which was published on the website of the Treasury on 13 October 2015. Interested persons were invited to provide comments on the draft Regulation by 30 October 2015. Information published on the Treasury’s website during the consultation period advised stakeholders that the Government was also proposing to make rules under the Act and that it was the Government’s intention that the meaning of agricultural land for the purposes of the Act would be aligned with the equivalent provision in the Regulation. Stakeholders interested in this issue were invited to refer to this when making comments on the Regulation. The Treasury also consulted closely with the Australian Taxation Office during the development of the Rule.
The kinds of land which are specified not to be agricultural land for the purposes of the Regulation (and Rule) were broadened following consultation with key stakeholders. For example, the Government decided that land that is used wholly or predominantly to locate infrastructure relating to a mining operation should not be land that is considered to be agricultural land for the purposes of the Act or the Foreign Acquisitions and Takeovers Act 1975.
The measures in the Rule are covered by the Regulation Impact Statement (RIS) included at Chapter 15 of the explanatory memorandum to the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015, the Foreign Acquisitions and Takeovers Fee Imposition Bill 2015 and the Register of Foreign Ownership of Agricultural Land Bill 2015.
The Rule commenced on the later of the start of the day after the Rule was registered on the Federal Register of Legislative Instruments and immediately after the commencement of the Act.
ATTACHMENT A
Section 1 — Name
The title of the instrument is the Register of Foreign Ownership of Agricultural Land Rule 2015.
Section 2 — Commencement
The whole of the instrument commenced on the later of:
• the start of the day after the instrument was registered in the Federal Register of Legislative Instruments; and
• immediately after the commencement of the Act.
Section 3 — Authority
The instrument is made under the Act.
Section 4 — Definitions
This section defines the meaning of terms used in the instrument.
Section 5 — Land that is not agricultural land
Section 5 of the Act enables rules to be made that specify that land of a kind is not agricultural land for the purposes of the Act. Those rules have effect despite the definition of agricultural land in section 4 of the Act. Section 4 of the Act defines ‘agricultural land’ to mean land in Australia that is used, or that could reasonably be used, for a primary production business.
The effect of section 5 of the Rule is that land is not agricultural land for the purposes of the Act if the land is not agricultural land for the purposes of the Foreign Acquisitions and Takeovers Act 1975 because of the Foreign Acquisitions and Takeovers Regulation 2015 (Regulation).
Section 44 of the Regulation provides that land is not agricultural land at a particular time if it meets the conditions specified in that provision. Broadly, the kinds of land that are specified by section 44 of the Regulation to not be agricultural land are:
• land that is not being used wholly or predominantly at the particular time for a primary production business and the zoning for the land requires a government authority to approve the use of the land for any primary production business;
• land that is not being used wholly or predominantly at the particular time for a primary production business if an application has been made to a government authority for the land to be rezoned as land whose zoning does not allow use for a primary production business or approval for a mining operation to be established on the land;
• land that is not being used wholly or predominantly at that time for a primary production business and is used wholly or predominantly for a mining operation, to locate infrastructure relation to a mining operation or to store waste from a mining operation;
• land that is not being used wholly or predominantly at the particular time for a primary production business if an approval (other than a mining or production tenement) of a government authority is in force that allows a mining operation to be established or operated on the land; infrastructure relating to a mining operation to be located on the land; or waste from a mining operation to be stored on the land. If land is acquired solely for, our used wholly or predominantly to meet a condition of such an approval (such as land purchased to satisfy a condition requiring land to offset an activity or act) it is also not agricultural land;
• land that is not being used wholly or predominantly at the particular time for a primary production business and is used, either under a law of the Commonwealth, a State or a Territory or a legally binding agreement, wholly or predominantly for the purposes of the protection or conservation of the environment;
• land that is not being used wholly or predominantly at the particular time for a primary production business land that is wholly or predominantly used for the purposes of a wildlife sanctuary or for rehabilitating animals;
• land that is not being used wholly or predominantly at the particular time for a primary production business and is located within an area that has been approved by a government authority as an industrial estate;
• land that is not being used wholly or predominantly at that time for a primary production business and has been approved by a government authority for use as a tourist facility, an outdoor education establishment, or an outdoor recreation facility that is open to the public;
• land that is not being used wholly or predominantly at the particular time for a primary production business and is one hectare or less; or
• the only primary production businesses that the land is or could reasonably be used for is a primary production business relating to submerged plants and animals etc.
Section 6 — Exemption for persons holding freehold interests or other rights because of enforcement of securities for moneylending agreements
Section 30 of the Act enables rules to be made that provide that Part 3 of the Act, or specified provisions of Part 3 of the Act, do not apply in relation to either all persons or persons specified by the rules, either generally or in circumstances specified by the rules.
The effect of section 6 of the Rule is that Part 3 of the Act does not apply to a person if the person started to hold the person’s freehold interest in agricultural land or their right to occupy agricultural land under a relevant lease or licence is by way of enforcement of a security held solely for the purposes of a moneylending agreement and the person is either the person who entered the moneylending agreement or a subsidiary or holding entity of that person.
Section 4 of the Rule provides that ‘moneylending agreement’ has the same meaning as in the Regulation. Section 5 of the Regulation defines ‘moneylending agreement’ to mean an agreement entered in good faith, on ordinary commercial terms and in the ordinary course of carrying on a business of lending money or otherwise providing financial accommodation, except an agreement dealing with any matter unrelated to the carrying on of that business. In addition, the entity that holds or acquires the interest must be:
• the entity (lender) that provided the money or financial accommodation under the moneylending agreement;
• a subsidiary or holding entity of the lender;
• a person who is in a position to determine the investments or policy of the lender;
• the security trustee (that is, an entity that holds various security interests created on trust for banks and other lenders) who holds or acquires the interest on behalf of the lender; or
• a receiver, or a receiver and manager, appointed in relation to one of the above persons.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Register of Foreign Ownership of Agricultural Land Rule 2015
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The primary purposes of the Register of Foreign Ownership of Agricultural Land Rule 2015 (Rule) are to prescribe rules:
• that specify that land of a kind is not agricultural land for the purposes of the Register of Foreign Ownership of Agricultural Land Act 2015 (Act); and
• to exempt persons from requirements to give notice under the Act.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.