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ATO crackdown on Foreign Investment rules

The ATO recently released new rules and key reporting dates in relation to foreign investment. They mentioned that as of December 1st 2015, fees apply to all applications to purchase residential real estate made by foreign investors. This means that foreign applicants who want to buy residential properties will be required to pay an application fee.

Domain.com.au published an article that further simplifies this. It mentions that for a property valued at $1 million or under, the fee is $5000. For a property valued over $1 million, the application fee is $10,000. For each additional million dollars the home is worth, the application fee increases by $10,000. So if a house is valued at $3 million, the application fee will be $30,000.

The fee does not provide any assurance of securing the property.

This crackdown on foreign investment rule includes new penalties for breach of rules where third parties (such as lawyers or real estate agents) will be penalised if they knowingly assist foreign investors to break the rules.

For individuals who do not get approval before buying property in Australia, criminal penalties have been increased from the maximum penalty of $90,000 to $135,000 and/or three years imprisonment. Additionally, companies who breach rules will face fines of up to $675,000.

Following the release of these updated rules, the Australian government has forced the sale of 27 properties as their owners had breached foreign investment rules. Scott Morrison, treasurer mentioned that this was because “The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed, meaning they were breaking the rules“.

Over 1,500 matters have been referred for investigation and 800 cases remain under active consideration.

If you have any questions about investing or taxation, please feel free to get in touch with the team here at Fortis Accounting Partners.  You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.

 

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