Geoff Hoffman
Partner •
Sydney
New Register of Foreign Ownership of Australian Assets commences on 1 July
Time to read: 4 minutes
Foreign investors will be required to provide notice to the Commissioner of Taxation of certain transactions relating to interests in land, entities and businesses in Australia which occur on or after 1 July 2023, irrespective of when an approval was granted (if any).
The new Register of Foreign Ownership of Australian Assets comes into effect on 1 July 2023.
The Register will create a variety of new reporting obligations for foreign investors, as well as Australian entities that become "foreign persons", in relation to certain interests in Australian land, entities and businesses. These are in addition to the existing obligations to seek approval from the Treasurer for certain transactions under Australia's Foreign Acquisitions and Takeovers Act (Cth) (FATA).
Scope of reporting obligations under the Register now finalised
Treasury has completed its consultation process in relation to the proposed amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (Regulation) and the revised Regulation comes into effect on 1 July 2023. The new provisions in the Regulation amend the provisions in the FATA relating to the new Register.
Key changes between the consultation draft of the Regulations and the final amendments are that:
- the scope of interests in land that are subject to the Register has been expanded to include interests in Australian land corporations;
- the Treasurer has the power to extend the period in which a register notice must be given;
- transitional provisions have been included to deal with interests acquired shortly before the commencement date.
Summary of reporting obligations for foreign investors from 1 July 2023
Foreign investors will be required to provide notice to the Commissioner of Taxation (the Registrar) of certain transactions relating to interests in land, entities and businesses in Australia. Transactions which occur on or after 1 July 2023 are captured by the new Register, irrespective of when an approval was granted, if any).
Set out below is a summary of the key reporting obligations for the Register:
Entities and businesses
Acquisitions and starting a business
Taking an action for which FIRB approval was required or voluntarily obtained relating to an entity or business, including actions taken under an exemption certificate.
Changes in interest
Changes of 5% or more to an interest on the Register (continuing obligation).
This could include passive increases (eg. as a result of not participating in a buy-back) or passive decreases (eg. as a result of a dilutionary capital raise).
Disposals
Ceasing to hold an interest recorded on the Register, including:
- a disposal of all interests in the Australian entity or business;
- where the Australian entity ceases to be an Australian entity, or is wound up; and
- where the business activities of the Australian entity or business which were required to be notified cease to be carried on.
Land
Acquisitions (regardless of whether FIRB approval is required)
Acquisition of an interest in any of the following, regardless of value:
- freehold Australian land;
- lease of Australian land with a term likely to exceed 5 years;
- an Australian land corporation or trust; or
- a mining or production tenement.
Changes in interest
If a foreign person has previously notified an interest in Australian land to the Register, it must also report changes in the nature of the land (such as the relevant land changing from residential land to commercial land).
Disposals
Ceasing to hold an interest recorded on the Register, including:
- the termination or expiry of a lease reported to the Register; or
- disposal of all interests in the relevant land.
Registrable water interests
Same reporting obligations as for the previous Register of Foreign Ownership of Water Entitlements apply.
Other
Becoming a foreign person
If a "foreign person" acquires an interest in an Australian entity such that the Australian entity becomes a "foreign person" (eg. because the foreign investor acquires an interest of at least 20% in the entity), the Australian entity must report its holdings of:
- any interest in an Australian entity or business that would have been a notifiable action or a notifiable national security action if acquired immediately after becoming a foreign person;
- any registrable water interest; or
- any interest in land that is of a kind that would have been required to be reported to the Register.
Ceasing to be a foreign person or FGI
An Australian entity which is a "foreign person" or "foreign government investor" (because of interests held in it by foreign investors) and has previously notified interests in Australian land, entities or businesses to the Register, must report when it ceases to be a "foreign person" or "foreign government investor" (eg. because a foreign investor's percentage interests in the Australian entity decreases).
When and how to provide notice to the Register
Where notice is required to be given to the Register, the notice must be given within 30 days of the "registrable event day" (which varies depending on the type of event but is generally the date on which the notifiable event occurs or when the person is aware, or ought reasonably to have been aware that the relevant event has occurred).
Foreign investors and their authorised advisors can submit notices for the Register via the Australian Taxation Office's (ATO) new "Online Services" portal.
Foreign investors and their representatives need to apply for a myGovID, which is a digital identifier that is unique to an individual, in order to access the online service. Foreign investors need to register themselves to use this service and log in to complete a one-off registration before they can authorise a representative to act on their behalf.
No fee is payable for notifying a registered circumstance. However, civil penalties apply for a failure to give notice within the requisite 30-day period.
Will the Register be public?
The Register will not be a public register. The information on the Register will be subject to similar rules as those that apply to other information relating to foreign investment in Australia under the FATA (ie that information can be disclosed to other government bodies to enable them to perform their functions or exercise their powers under the FATA).
Information on the Register will also be permitted to be disclosed to a person to whom information on the register relates.
Interaction with existing reporting regimes
On commencement of the new Register, the following registers maintained by the ATO will be repealed and all information will be incorporated into the new Register:
- Register of Foreign Ownership of Agricultural Land;
- Register of Foreign Ownership of Water Entitlements; and
- Register of Residential Land.
All circumstances required to be reported in relation to these registers will instead be reported to the Registrar and recorded on the new Register.
The Register of Foreign Owners of Media Assets maintained by the Australian Communications and Media Authority and the Register of Critical Infrastructure Assets administered by the Cyber and Infrastructure Security Centre will continue to operate.
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Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.