The federal Treasury Department this week released their response to a House of Representatives report that contained 12 recommendations on how foreign investors should be better regulated.
In their response, Treasury said it agreed that more needs to be done to crack down on those who assist in the breaking of Foreign Investment Review Board (FIRB) rules.
“The Government will amend the Foreign Acquisitions and Takeovers Act 1975 to introduce civil pecuniary penalties for third parties that knowingly assist foreign investors to breach foreign investment rules. Provisions currently exist under the Criminal Code for knowingly assisting another person to commit a criminal offence,” the response read.
“Tougher penalties together with the increased compliance and enforcement regime will help deter non-compliance with Australia’s foreign investment rules.”
According to the response, the government is also set to tighten the rules for developers marketing projects to overseas buyers.
Currently developers (Australian or foreign) can apply for an advanced-off-the-plan certificate to sell all new dwellings in a development of 100 or more dwellings to foreign persons, provided the development is marketed locally as well as overseas, however failing to do this is only loosely regulated.
“There are currently no penalties for breaching this condition other than refusing to approve further advanced off-the-plan applications from that developer. To provide greater options to enforce this requirement on property developers it is proposed that criminal penalties, civil pecuniary penalties and infringement notices be introduced into the Act, in line with penalties for other breaches of the Act,” the government’s response said.
“The Government will also tighten the rules around advanced off-the-plan certificates by limiting the value of all apartments that can be bought by a single foreign person to $3 million. If foreign investors want to purchase apartments above this value, they would have to seek individual approval.”
The response also outlines stiffer criminal and civil punishments for those who break FIRB rules, how the Australian Taxation Office will take a bigger role in investigating and enforcing FIRB rules and that money laundering would be a bigger focus when investigating foreign investors.
Those found to have breached foreign investment laws will also be forced to forfeit any capital gain they may receive if they are forced to sell a property.