Treasurer Scott Morrison has confirmed that the Government has forced the sale of another 8 homes that were illegally purchased by foreign nationals in contravention of Australia’s foreign ownership rules, with 800 cases also currently under active investigation. Here’s the full media release:
The Turnbull Government’s strong foreign investment rules have enabled the Treasurer to ensure that a further eight Australian residential properties held in breach of the foreign investment framework are divested by foreign nationals.
“The Government is committed to enforcing our rules so that foreign nationals illegally holding Australian property are identified by authorities and their illegal holdings relinquished,” Mr Morrison said.
“We recognise that foreign investment provides significant benefits for Australia but we must also ensure that such investment benefits all Australians, conforms to our rules and is not contrary to our national interest.
“Properties were purchased in Victoria, Queensland and New South Wales with prices ranging from about $200,000 to over $5 million. The individuals involved come from a range of countries – Canada, China, India, Malaysia and the United States of America.
“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.
“This brings to 27 the number of properties the Coalition Government has already forced foreign nationals to dispose of since taking office in 2013.
“These divestments are a reminder that the Coalition Government’s increased compliance measures, which include transferring responsibility for residential real estate enforcement to the Australian Taxation Office (ATO), are working to ensure our foreign investment rules are being enforced.
“Under the reduced penalty period announced in May, the investors linked to the eight properties now have 12 months to sell the properties, rather than the normal three month period, and will not be referred for criminal prosecution.
“The Government’s transfer of responsibility to the ATO for compliance has enabled more active investigations and actions targeting illegitimate purchases.
“Since this transfer in May, over 1,500 matters have been referred for investigation. Through information provided by the public, together with the ATO’s own enquiries, over 800 cases remain under active investigation.
“Foreign investors who breached the residential real estate rules had until 30 November 2015 to voluntarily come forward under the reduced penalty period. However investors caught in breach of the rules now face severe penalties.
“Illegal real estate purchases by foreign citizens attract criminal penalties of $135,000 or three years’ imprisonment, or both for individuals; and up to $675,000 for companies. The new rules also allow capital gains made on illegal investments to be forfeited.
“We have also introduced application fees so the cost of the system is no longer borne by the Australian taxpayer.
“The Government’s transfer of responsibility to the ATO for compliance has enabled more active investigations and actions targeting illegitimate purchases.
“Since transferring residential real estate compliance functions to the ATO in May, over 1,300 matters have been referred for investigation. Through the information provided by the public, together with the ATO’s own enquiries, there are now over 700 cases under active investigation.
“I once again warn foreign investors in residential real estate that they must comply with Australian law. Australia welcomes foreign investment but at all times foreign investors must comply with our laws,” Mr Morrison said.
Fantastic news. Anyone that still believes that the ATO is not serious about cracking-down on illegal foreign investment into Australian property needs to re-think their position.
The ATO has been manned with 50 enforcement officers and has sophisticated systems and detailed data matching capabilities at its disposal. Moreover, last month the ATO lodged a notice in the Government Gazette (see here), which demanded 32 years of detailed transaction history from Australia’s state and territory land titles offices and rental boards, in order to create a new central depository of data on property ownership and to facilitate their investigations.
The jig is up for the illegal foreign buyers and facilitators that have helped price-out young Australians from home ownership.
