From the ABC:
In the first seven months after tougher penalties for illegal foreign property investors were introduced the Tax Office collected less in fines than the cost of an average Sydney house.
In response to a 2014 House of Representatives inquiry that revealed there had been no prosecutions for a breach of the rules since 2006 and that penalties were manifestly inadequate, the Abbott government responded with beefed up penalties and by moving enforcement to the Australian Taxation Office (ATO).
When the tougher penalties were announced on May 2, 2015, then treasurer Joe Hockey warned:
However, since the ATO took over the approvals, enforcement and penalties process on December 1 last year, the penalties seem anything but “very hard”.
In response to a Freedom of Information (FOI) request from the ABC, the ATO said it had identified more than 270 breaches of the foreign investment rules and issued 150 penalty notices by the end of the financial year on June 30.
Those penalties totalled $695,980, or an average of $4,640 each.
That is a far cry from the much touted maximum penalties of $127,500 for individuals, $637,500 for companies and up to three years in jail introduced by the Abbott government.
The total amount of penalties issued in the first seven months of ATO enforcement is worth less than the typical Sydney home price of $775,000.
Forced sale of 30 properties worth $78m
The ATO said the penalties were issued to people who failed to seek the required foreign investment approval before purchase or who breached a condition of their investment approval, such as temporary residents failing to sell when they leave the country.
In addition to the penalties, Treasurer Scott Morrison has approved the forced sale of 30 foreign-owned properties valued at $78 million.
While the Government does not receive all of those proceeds, illegal foreign owners are not permitted to profit from the sale.
However, the ATO said only 21 per cent of breaches have resulted in a forced sale or voluntary divestment, while 23 per cent received amendments to a previous investment approval and 56 per cent have been granted retrospective approval for their purchase.
Amnesty nets $438.5m worth of property disclosures
The Federal Government’s amnesty period before the tougher penalties for illegal buyers of residential property were introduced netted $438.5 million worth of disclosures.
Data provided by the ATO shows 302 people came forward to the ATO during its reduced penalty period between May 2 and November 30, 2015.
Victoria accounted for well over half the amnesty period applications, with New South Wales having the biggest proportion of the remainder.
The ATO said more than half of the investors who dobbed themselves in have been granted retrospective approvals because they would have been approved had they applied to the Foreign Investment Review Board (FIRB) before purchasing.
Those cases which were not eligible for retrospective approval have resulted in “concessional divestment”, self-divestment or a variation to a prior FIRB approval, such as an extension of time to develop vacant land.
Nearly 50 ATO staff enforce foreign buyer rules
The ABC also asked for information about staffing levels within the unit charged with enforcing the rules.
Since assuming control of regulating foreign investment in residential property, the ATO has maintained a staff of just under 50
The ATO said this unit also receives support and resources from the rest of the organisation.
“The team is supported by the ATO’s data analytics branch, legal counsel and works closely with the ATO’s high wealth individuals and international audit areas,” it told the ABC.
“This approach helps to guard against Australian property being used in connection with serious and organised crime, including the laundering of money through property in Australia.”
It is a massive increase on the resources the Foreign Investment Review Board (FIRB) had available when it was tasked with the same responsibilities.
FIRB told the Parliamentary inquiry into foreign investment in residential real estate that it had just eight staff to review applications, monitor compliance and try to detect and prosecute breaches.
Aside from performing all the tasks that FIRB used to do, the ATO said its has presented to over 2,000 people at community engagement events, run stalls at business exhibitions and advertised the changes to penalties on two real estate websites targeting Chinese buyers that have a combined monthly audience of around 2 million.
What a bloody joke.
