3. Certain investors, including FGIs, are subject to AU$0 thresholds, meaning FIRB approval is always required. FGIs include (i) foreign governments, (ii) separate government entities (e.g., public pension funds, endowment funds, state-owned enterprises, sovereign wealth funds and their portfolio companies), and (iii) corporations, trustees of a unit trust or general partners of a limited partnership in which: ^ FGIs from one country have a 20% or greater collective interest in the investor; or ^ FGIs from more than one country have a 40% or greater collective interest in the investor. As a result, a few investment funds, in particular private equity funds, will be FGIs if their investors/limited partners include FGIs. FGIs are typically subject to a AU$0 monetary value threshold, which means that FIRB approval will generally be required for any investments in Australian land or entities. There is an FGI exemption for investment funds that are FGIs where certain “passive investor criteria” are met (i.e., individual investors are not able to influence investment decisions or the management of any investments of the fund, no individual investor has an interest in the fund other than as a limited partner and the fund is a pooled investment vehicle). Such passive investor FGIs can also apply for exemption certificates. Under the FIRB Reforms, the Treasurer would be granted broader powers to issue exemption certificates that can “switch-off” or “adjust” the operation of FATA for certain investors – including by amending their FGI status, foreign personhood, the tracing rules, who is considered an “associate”, and reporting obligations. This may make it easier for purely passive investors with FGI status to obtain an exemption from being treated as an FGI (and therefore relief from being subject to the AU$0 threshold for all contemplated transactions). Historically, exemption certificates are typically granted for a limited period of time and for a particular purpose. FIRB guidance states that
applications for exemption certificates, as with other FIRB approval applications, will be assessed on a case-by-case basis. Post-approval compliance requirements An FIRB application may be approved with conditions or without conditions. According to FIRB’s most recent quarterly report, 83 applications were approved with conditions, while 223 were approved without conditions. The Treasurer may impose reporting requirements, tax-related conditions or broad-based conditions specific to national security investments. On May 28, 2025, an updated guidance note was provided which reflects the Australian government’s increased scrutiny of tax arrangements. Investors currently need to report certain interests in Australian land, entities, businesses, and assets through the Register and other registers of Australian water interests, agricultural land, and residential land, as applicable. The FIRB Reforms propose to streamline these reporting obligations: by requiring investors to report via the FIRB Portal instead of separately through the Register (avoiding the need to re-enter application information). Existing reporting requirements for acquisitions of water interests, agricultural land, and residential land would continue to be made to the Register. Investors will continue to require a specific MyGovID account to make reports. The time period to report for most registers remains 30 days after the applicable interest has been acquired. Notably, if an investor becomes a foreign person (and therefore becomes subject to the FDI regime) while holding relevant Australian interests or carrying on a national security business, reporting under the Register will need to be made, regardless of when the interests were acquired, or the business started. Failure to make a timely report on the Register can incur a significant penalty which is accrued daily: currently AU$82,500. The penalty is indexed annually on July 1.
Australia
9
Powered by FlippingBook