ATO’s New Register of Foreign Ownership of Australian Assets

What is the Register?

As part of major reforms to the foreign investment framework, The Australian Taxation Office (ATO) has announced that a new Register of Foreign Ownership of Australian Assets (Register) will be introduced on 1 July 2023.

The new Register will record foreign interests in most Australian land (regardless of value), entities, businesses and assets.

The purpose of the Register is to encourage compliance with Australia’s foreign investment framework and increase Government visibility of foreign investments in Australia. The information collected under the Register will not be available to the public.

With a view to providing a streamlined reporting experience and mitigate the regulatory burden for foreign investors, the Register will amalgamate, incorporate and expand on existing registers for residential land, agricultural land and water rights. Existing obligations under the Foreign Investment Review Board (FIRB) legislation will continue as is, to avoid duplication of notifications.

From 1 July 2023, individuals and entities that meet the definition of a “foreign person” will be required to notify the ATO about certain events relating to their Australian interests including acquiring new interests, becoming a foreign person while holding relevant interests, or any changes in the nature of those interests.

There will be no change to the current definition of “foreign person” which generally includes individuals not resident in Australia, foreign governments, foreign corporations and entities with substantial foreign ownership.

Notice will need to be provided to ATO within 30 days of the triggering day of a particular event occurring, with significant civil penalties payable (250 penalty units which is currently equivalent to $68,750) in the event of non-compliance.

For example, for the acquisition of land, foreign persons will have 30 days from the date of settlement to notify the ATO in respect of the requirements for the Register.

No fee is payable upon giving notice under the Register.

The ATO is currently seeking public comments on the specific type of information that is to be provided in a Register notice. Generally, the Register will require details about the foreign person or relevant entity, the relevant transaction and its value, the assets held and intended use of land.

Further details regarding the information required in a notice and any relevant forms will be available before 1 July 2023.

When does the Register come into effect?

Legislation implementing the new requirements is incorporated in Part 7A of the Foreign Acquisitions and Takeovers Act 1975 having received Royal Assent on 10 December 2020. This new legislation will come into effect on 1 July 2023 pending formal proclamation by the Government.

As it currently stands, the changes will not apply retrospectively which means only events occurring on or after 1 July 2023 are captured by the requirements of the new Register, for example, for acquisition of land, if settlement occurs on or after 1 July 2023.

From 26 June 2023, the ATO will also make available online services for foreign investors by way of a secure online portal through which notice required by the new legislation can be given. Foreign investors will be able to use this portal from 26 June 2023 onwards to manage a range of information relating to their Australian investments.

Practical Implications

The legislation implementing the Register introduces significant obligations from 1 July 2023 onwards, including:

1. The new Register will capture legal interests in residential land, commercial land and agricultural land. No thresholds to the value of the land apply to the new requirements to notify land acquisitions to the ATO.

2. The Register also captures acquisitions of equitable interests in long-term leases or licences of agricultural land.

3. Australian entities will be required to start reporting relevant events if percentage changes in their holdings bring them under the definition of a “foreign person”.

4. Foreign persons will have to provide notice if they take a “significant action” or “notifiable action” in relation to interests in Australian entities or businesses.

5. Foreign persons and entities will also have to provide notice if they cease to be foreign.

6. Once interests have been registered, foreign persons will need to report relevant changes in the type and nature of the interest held, including where there is a minimum of a 5% change in interests held in a relevant entity or business.

These new obligations along with the introduction of a significant civil penalty for non-compliance mean foreign investors and relevant local entities that are susceptible to becoming foreign will need to start monitoring changes in their interest holdings and implement administrative processes to ensure compliance.

Current and potential foreign investors should monitor this area as these changes come into force.

1. See https://www.ato.gov.au/General/Foreign-investment-in-Australia/Contact-us-about-foreign-investment/.
2. See https://firb.gov.au/general-guidance/legislation.
3. Foreign Acquisitions and Takeovers Act 1975 (Cth), s 4 (definition of ‘foreign person’).
4. Foreign Acquisitions and Takeovers Act 1975 (Cth), Part 7A.
5. See https://www.ato.gov.au/General/Online-services/Foreign-investors/Online-services-for-foreign-investors/.
6. Foreign Acquisitions and Takeovers Act 1975 (Cth), s 4 (definition of ‘foreign persons’, ‘aggregate substantial interest’ and ‘substantial interest’).
7. Foreign Acquisitions and Takeovers Act 1975 (Cth), ss 40, 41, 47.

Please contact Gerard Thorpe by email with any questions or to discuss this article further gerard.thorpe@brhlawyers.com.au.

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