Foreign buyers fined $2.7m

by Miklos Bolza11 Apr 2017
Five hundred penalty notices and fines worth $2.7m have been issued to foreign investors as a result of a penalty regime introduced on 1 December 2015.

“Penalty notices have been issued to people who have failed to obtain Foreign Investment Review Board (FIRB) approval before buying property as well as for breaching a condition of previously approved applications,” the Australian Taxation office (ATO) said in a statement originally delivered to The Guardian and obtained by Australian Broker.

The ATO also confirmed that the Treasurer has approved the required sale of 61 foreign-owned properties worth more than $107m.

“From investigations finalised to date we have found over 700 breaches of the rules, some of which arose from investors coming forward during the reduced penalty period,” the ATO said.

This reduced penalty period was set between 2 May and 30 November 2015 – an amnesty period where foreign investors could voluntarily come forward before tougher penalties were introduced.

The majority of investigations where a breach occurred involved properties in Victoria, New South Wales, Queensland and Western Australia, the ATO said.

While figures vary daily for these breaches, approximately 20% resulted in a required sale or self-divestment, 20% have required amendments to previously approved FIRB applications, and 60% have been granted retrospective approvals.

These retrospective approvals occurred “where the investor did not apply for FIRB approval before they purchased the property but would otherwise have received approval,” the ATO said. 

“Retrospective approvals are granted with strict conditions. Breaches of these conditions will result in civil penalties or criminal prosecution. The ATO will continue this important work to ensure a stronger enforcement of the foreign investment rules.”

A number of key issues have been exposed following these investigations, including:
  • The failure to seek FIRB approval prior to the purchase of a property
  • The failure to sell the property once the owner’s temporary visa expires
  • Temporary resident visa holders owning more than one property
  • Australian companies controlled by foreigners owning multiple established properties
  • The failure to commence construction on vacant land or for redevelopment within conditional timeframes
Breaches involved a diverse range of properties including vacant land, apartments, suburban houses and luxury waterfront homes, the ATO said.

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COMMENTS

  • by Scott Compton, Sydney 11/04/2017 9:01:48 AM

    There need to be checks and balances prior to the purchase rather than in retrospect. Why is there no responsibility on the selling agents to ensure the buyer can legally purchase the property? We have legitimate Australia's missing out on property regularly due to illegal purchases and these legitimate Australia's pay for reports, legal services to be in a position to buy.