In a move to enhance regulation of foreign investment, the federal government has launched a new campaign urging Australians to dob in foreign residential property purchasers via a dedicated platform run by the Australia Tax Office (ATO).
Treasurer Josh Frydenberg is hoping that the Tip OFF campaign will encourage people to report suspicious purchases or ownerships noting that this is part of upgraded efforts to safeguard Australian’s interest in the residential real estate sector.
“Stronger and more flexible enforcement options will ensure that our foreign investment regime can respond to emerging risks and global developments,” Frydenberg said in a statement on Dec 21.
“While the majority of foreign investors act in good faith in complying with the law, Australians expect their government to maintain a high standard of enforcement in order to safeguard Australia’s national interest, businesses and the economy,” he said.
Australians are encouraged to call the hotline on 1800 060 062 or fill in an online form on ATO website.
The new campaign builds on the government’s sweeping reforms to strengthen the foreign investment framework. It follows the legislation passed on Dec. 9 that increases infringement penalties for residential land valued at $333,000 to those over $5 million.
Other major changes include a zero approval threshold for all proposed foreign investment in Australian businesses and assets, the enhanced monitoring and investigation powers by FIRB, as well as the “last resort” power by Treasurer.
The new law, which comes into effect from Jan. 1, 2021, also introduces new civil penalties and infringement notices for providing false or misleading information.
Under the current rules, foreigners who are not citizens or residents of Australia are generally restricted to only purchasing newly built or off-the-plan properties. They are also required to apply for approval from the Foreign Investment Review Board (FIRB) before any purchase.
Foreigners can also purchase vacant land to build one residential property within four years from the date of the FRIB approval, or an established dwelling to redevelop into multi-dwellings within a four-year timeframe. Temporary residents can apply to purchase one established dwelling as their primary residence while living in Australia.
Currently, a breach of foreign investment rules will result in a criminal prosecution and potentially up to three years’ imprisonment. As a result Frydenberg urged law-breakers to voluntarily disclose their breaches by calling the hotline, which may result in a more lenient penalty.
According to FIRB 2018-19 Annual Report, the ATO identified 600 properties in breach of foreign investment laws, a significant increase from the 131 illegal cases in 2017-18 and 96 in 2016-17. This is backgrounded against an annual $7.2 billion spendings by foreigners on Australian residential property.
The report also shows that the United States was the largest source country of proposed investment by value across all asset classes, sitting at $58.2 billion. At the same time, China slipped to the fifth behind Canada, Singapore and Japan, reflecting an ongoing downward trend from its peak in 2015‑16 at $47.3 billion.