Crackdown on foreign investors
Australian homes purchased by foreign investors over the past 10 years will be randomly audited by the Australian Taxation Office (ATO) as part of the crackdown on foreign investment. ATO now has greater access to investor information and has commenced processing foreign investment data relating to residential real estate.
We expect that by 1 December 2015 the ATO will become responsible for all residential land acquisition functions of the Foreign Investment Review Board (‘FIRB’), namely audit, compliance and enforcement functions. This will mean that foreign investors who purchase property without obtaining valid FIRB approval are now more likely to be caught by the ATO and subsequently prosecuted.
From December 1, criminal penalties will be increased to $127,500 or three years imprisonment for individuals and to $637,500 for companies who are found to breach Australia’s foreign investment rules.
The government is also introducing a civil penalty to capture any capital gain made on divestment of a property to ensure people who break the rules will not profit.
Real estate professionals who knowingly assist a foreign investor to breach the rules will now also be subject to civil and criminal penalties, including fines of $42,500 for individuals and $212,500 for companies.
Amnesty period for voluntary disclosure
The Australian government has announced a moratorium to encourage people who have made unlawful purchases to turn themselves in. Investors will have until November 30 to come clean and sell their properties or face potential prosecution.
Under the amnesty there will be reduced penalties for investors that voluntarily tell the ATO they have breached the rules. They will be forced to sell their properties, but they will not be subject to criminal prosecution.
The amnesty will also mean that they have 12 months to divest – rather than a shorter period at the discretion of federal Treasurer.
What foreign investors need to do
Any foreign investor that has purchased a residential property without FIRB approval should come forward and disclose any possible breaches to avoid hefty penalties.
Foreign investors will also be required to sell their properties.
Please contact our office if you have any query regarding your investment in Australia.
Please notice, prosecution will be commenced by the ATO. As a former prosecutor working for the ATO, Adrian has significant prosecution experience and knows how the ATO operates. His experience is a significant asset.
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