Foreign Investment in Australia

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Foreign investment is welcome in Australia; however the Australian Government regulates the investment by foreigners through its Foreign Investment Policy.

The Australian Government’s approach to Foreign Investment Policy is to encourage foreign investment consistent with community interests.  The Foreign Investment Policy provides for Government scrutiny of many proposed foreign purchasers of Australian businesses and property.  The Government has the power under the Foreign Acquisitions and Takeovers Act 1975 (“the Act”) to block proposals that are required to be notified and which are determined to be contrary to the National interests.



The Foreign Investment Review Board (“FIRB”) is a Federal Government body which examines proposals by foreign people who undertake direct investment in Australia, and makes recommendations to the Government under this Foreign Investment Policy.

It is unlawful for a foreign person to invest in Australia without first obtaining Foreign Investment Review Board approval, unless the purchase is exempt.



The Act and the Foreign Investment Policy apply to acquisitions by foreign persons.  A foreign person is defined as:

  • a natural person not ordinarily resident in Australia;
  • a corporation in which a natural person not resident in Australia or a foreign corporation holds a controlling interest;
  • a corporation in which 2 or more persons, each of whom is either a natural person or a resident in Australia or a foreign corporation holding an aggregate controlling interest;
  • the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation which holds a substantial interest; or
  • a trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, holding an aggregate substantial interest.

A substantial foreign interest occurs when a single foreigner has 15% or more of the ownership, or several foreigners have 40% or more in aggregate of the ownership of any corporation, business or trust.



The types of proposals by which foreign interests are required to obtain approval to invest in Australia may be summarised as follows:-

  • Business – acquisition of interests (including shares and other assets which may result in the control of the business) in an Australian business or corporation which is valued above or the proposal values it above $219,000,000 (except for US investors in which a threshold of $953,000,000 applies – except for investments in prescribed sensitive sectors where the standard $219,000,000 threshold applies);
  • Off Shore Companies – takeover of off shore companies whose Australian subsidiaries or gross assets exceed $219,000,000 (except for US investors in which a threshold of $953,000,000 applies – except for investments in prescribed sensitive sectors where the standard $219,000,000 threshold applies);
  • Real Estate – acquisitions of interests in Australian real estate (including interests that arise via leases, financing and profit sharing arrangements) that involve:

–                      development of non-residential commercial real estate, where the property is subject to heritage listing, valued at $5,000,000 or more and the acquirer is not a US investor;

–                      developed non-residential commercial real estate where the property is not subject to heritage listing, valued at $50,000,000 or more or $953,000,000 for US investors;

–                      vacant non-residential land irrespective of value;

–                      residential real estate irrespective of value; or

–                      shares or units in Australian Urban Land Corporations or trust estates irrespective of value.

  • Foreign Government – direct investments by foreign Governments and their agencies;
  • Media – portfolio investments in a media sector of 5% or more and all non-portfolio investments irrespective of its size;
  • proposals where any doubt exists as to whether they are notifiable;



Entering into a Contract

All contracts by foreign persons to acquire interests in Australian real estate (including temporary residents) must be made conditional upon FIRB approval.  For properties to be purchased at auction prior FIRB approval must still be obtained.

Temporary Resident


The definition of a temporary resident was expanded in December 2008 to include all foreign persons who are living in Australia with a visa of at least 12 months duration and those on long-term bridging visas.  Those with tourist visas or short term business visas will continue to not be considered as temporary residents.

In April 2010 the Government changed the Foreign Investment Policy to state that temporary residents may apply to buy vacant land on which to build (subject to development conditions), new dwellings and/or an established (second hand) dwellings to be used as their principal place of residence.  Where the Government provides approval to buy an established dwelling, it will be subject to a condition that the temporary resident sells the property when it ceases to be their principal place of residence.

Applications by temporary residents to buy established dwellings for investment purposes will not be approved.

Vacant Residential Land


Acquisitions of vacant land for development (including house and land packages where construction has not commenced) by foreign interests are normally approved subject to the land being developed within 24 months.  Prior to the December 2008, the Government imposed conditions for continuous substantial construction to commence within 12 months and a minimum amount equivalent to 50% of the acquisition cost be spent on the development.  These conditions no longer apply.

New Dwellings

A new dwelling is now defined as having been resided in less than 12 months, in place of the prior requirement that the dwelling had to be uninhabited.  This allows developers to temporarily rent out premises until a buyer is found.  There are now no restrictions on the number of dwellings/units that may be sold to a foreign entity in a new development.  However, a separate FIRB approval must be obtained for each sale to a non-resident.

Foreign Students

As outlined above, foreign students, as temporary residents, must apply for approval.

Acquisitions of Residential Real Estate Not Requiring Notification to FIRB

The following acquisitions of residential real estate do not require notification to the Foreign Investment Review Board:

  • Australian citizens living abroad purchasing either in their own name or through an Australian corporation or trust;
  • Foreign nationals who are the holders of a permanent visa;
  • New Zealand citizens;
  • Foreign nationals purchasing as joint tenants with their Australian citizen spouse;
  • Acquisitions from a developer where the developer has pre-approval to sell those new dwellings to foreign persons;
  • An interest in a time share scheme which does not permit more than 4 weeks entitlement per year;
  • Certain residential real estate in Integrated Tourism Resorts;
  • An interest acquired by Will or devolution by operation of law;
  • An interest acquired by the Government (Commonwealth, State or Territory or local).



Commercial real estate includes vacant land for commercial development and developed commercial property.

Foreign interests intending to acquire commercial real estate are required to seek approval from the FIRB prior to purchase unless the acquisition is exempt.  Exempt acquisitions include:-

  • developed commercial property valued at less than $50,000,000 or $953,000,000 for US investors, or $5,000,000 for heritage listed properties where the acquirer is not a US investor; and
  • developed commercial property where the property is to be used immediately and in its present state for industrial or non-residential commercial purposes.  The acquisition must be wholly incidental to the purchaser’s proposed or existing business activities.


Developed Commercial Property

Developed commercial property includes the acquisition of hotels, motels, hostels etc.  Proposed acquisitions of developed non-residential commercial real estate valued above the relevant thresholds are normally approved unless they are determined to be contrary to the national interest including vacant land.

Vacant Commercial Land

Proposed acquisitions of real estate for commercial development are normally approved subject to the following conditions:

  • continuous constructions commencing within 5 years;
  • the minimum amount equivalent to 50% of the acquisition cost or current market value of the land (whichever is higher) being spent on the development.



Foreign parties wishing to invest in Australian businesses which are valued below the $219,000,000 threshold (except for the $953,000,000 threshold for US investors (excluding the prescribed sensitive sectors where the standard $219,000,000)) do not usually require approval.  Legal advice should however be sought to ensure that the proposed business venture does not require approval.



Other acquisitions that may require approval from the Foreign Investment Review Board include:

  • mining tenements;
  • forestry;
  • banking;
  • civil aviation;
  • ports;
  • shipping;
  • media;
  • telecommunications;

however specific advice should be sought in relation to each of these different areas.



The Government takes seriously breaches of the Foreign Acquisitions and Takeovers Act 1975.  Persons or corporations who fail to obtain prior approval to buy property (as well as assets and/or shares) are subject to penalties and in some cases imprisonment. There are also provisions under law that make it an offence to provide false or misleading information, or to enter into any schemes for the purpose of avoiding the provisions of the act.



At Ferguson Cannon, we have extensive experience in foreign investment into Australia, and in making applications to the FIRB.  Whether you are purchasing residential land, commercial land or acquiring an interest in a business or a corporation, we can assist you in the transaction, and in making your application to FIRB; and ensuring that all of your interests are protected; the relevant information given to the FIRB, and that you satisfy all of the Government’s requirements.

Please contact Byron Cannon, Director with any enquiries or visit our website for further information.

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Category: Fact Finders, Foreign Investment, General

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