New Register of Foreign Ownership - Introduction
The Australian Taxation Office (ATO) has announced that a new Register of Foreign Ownership of Australian Assets is set to come into effect on 1 July 2023.
This Register will create several new reporting obligations for foreign investors and Australian entities that become “foreign persons”, in relation to certain interests in Australian land, entities and businesses.
Foreign investors will be required to provide notice to the Commissioner of Taxation (the Registrar) of certain events relating to interests in land, entities and businesses in Australia. Such events include acquisitions, disposals, lease arrangements, options to purchase or lease arrangements, as well as the creation or transfer of interests in a trust.
These reporting obligations are in addition to the approval processes and reporting obligations that already apply under Australia's Foreign Acquisitions and Takeovers Act (FATA).
In anticipation of the Register’s commencement, Treasury has released an exposure draft of amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) which is open for consultation until 31 March 2023. The ATO, which will administer the Register, has also released draft data standards prescribing how and what information must be reported for inclusion in the Register.
Notifying "registrable interests" to the Registrar
When a “registrable event” occurs, foreign investors must give notice to the Registrar within 30 days of the “registrable event day”. This day varies depending on the type of event but is generally the date on which the notifiable event occurs, or when the person is aware or should have been aware that the relevant event has occurred.
The ATO will be launching a new online platform through which investors will be able to report interests for the new Register. A third party will also be able to be authorised by a foreign investor to give notice on behalf of the foreign investor. Civil penalties will apply for a failure to give notice within the requisite 30-day period.
Is the Register public?
The Register will not be public. The information on the Register will be subject to similar rules as those that apply to other information relating to foreign investment in Australia under the FATA. That is, the information can be disclosed to other government bodies to enable them to perform their functions or exercise their powers under the FATA.
Information on the Register will also be permitted to be disclosed to a person to whom information on the register relates.
Interaction with existing reporting regimes
Under the FATA, a person must notify the Treasurer within 30 days of taking certain actions approved under a no objection notification or an exemption certificate, as well as certain notifiable situations after the action has been taken. These situations include when the relevant interest ceases or changes, or the entity or business the interest relates to ceases to exist.
From 1 July 2023, these circumstances will also need to be notified to the Registrar in order to be recorded on the new Register. To reduce duplication, the draft regulations provide that by giving a notice to the Registrar of a registered circumstance, this will also satisfy any other equivalent reporting obligations to the Treasurer under the FATA in relation to the same action.
On commencement of the new Register, the registers maintained by the ATO, including the Register of Foreign Ownership of Agricultural Land, the Register of Foreign Ownership of Water Entitlements, and the Register of Residential Land, will be repealed, and all information will be incorporated into the new Register. All circumstances required to be reported in relation to these registers will instead be reported to the Registrar and recorded on the new Register.
The Register of Foreign Owners of Media Assets maintained by the Australian Communications and Media Authority and the Register of Critical Infrastructure Assets administered by the Cyber and Infrastructure Security Centre will continue to operate
New Register of Foreign Ownership - Mark your calendars!
These key dates related to the new Register of Foreign Ownership of Australian Assets:
- 17 June and 25 June 2023: the current ATO Land and Water Registration form will be retired and none of the relevant FIRB forms will be available on the ATO website. During this time, the ATO will provide information on how to notify registration obligations.
- On 26 June 2023, the ATO plans to launch its online services, which will allow foreign investors to report their interests under the new Register. The existing online ATO forms for residential land applications and vacancy fee forms will also be moved to this new platform.
- The new Register is set to begin on 1 July 2023.
If you have any queries about the New Register of Foreign Ownership , or Australian tax issues or tax matters in general, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.