NO.055

The Government has announced a number of changes to foreign investment policy. These

follow from the outcome of the Joint Prime Ministerial Task Force on Australia New Zealand

Bilateral Relations. In addition, a number of policy and administrative changes will be

made following a review of foreign investment policy that formed part of the

Government’s schedule of reviews of legislation imposing costs on business.

The changes will reduce notification obligations on business and streamline the

administration of foreign investment policy, while continuing to ensure that foreign

investment is consistent with the interests of the Australian public.

The Prime Minister announced on 4 August 1999, that Australia will increase the

acquisition threshold for foreign investment in existing businesses to $A50 million on a

multilateral basis, as well as remove approval requirements for special category visa

holders investing in residential real estate through Australian based companies and

trusts. Consistent with these measures, the Government will also increase to $50 million

the voluntary notification threshold for the Australian assets of an offshore company to

be acquired by another offshore company. In addition acquisitions of residential property

by Australian permanent resident visa holders, not ordinarily resident in Australia,

purchasing through Australian companies or trusts will be exempt from notification.

Other modifications to foreign investment policy will be made in the following areas:

• the treatment of vacant land and housing packages;
• treatment of developed non-residential commercial property;
• the designation of integrated tourism resorts;
• the sale of strata titled hotel accommodation;
• Australian citizens and their foreign spouses purchasing as joint tenants; and,
• foreign trustees acquisition of interests in urban land.

Details of all the changes are attached.

ATTACHMENT

Proposed Changes to Foreign Investment Policy

The Prime Ministers’ statement of 4 August 1999 announced that Australia would:

1. increase the notification threshold for foreign investment in existing businesses from

   $5 million ($3 million for rural businesses) to $50 million;

2. remove foreign investment approval requirements for individuals, who hold or are

   entitled to hold a special category visa and invest in Australian residential real estate

   through Australian companies and trusts; and

3. increase the limit for which applications for investment in businesses are registered

   but are generally not fully examined from $50 million to $100 million.

Consistent with measures (a) and (b) above, the Government has also decided:

• to increase the voluntary notification threshold to $50 million (from $20 million)

  for the Australian assets of an offshore company to be acquired by another offshore

  company.

• to exempt acquisitions of residential real estate by Australian permanent resident visa

  holders, not ordinarily resident in Australia, purchasing through Australian companies or

  trusts.

In addition the following modifications to policy are planned:

• In addition, acquisitions of developed non-residential commercial properties, valued

  between the notification threshold and $100 million, will no longer be subject to detailed

  examination, unless the facts of the proposal raise issues pertaining to the national

  interest.

• The hotel management agreement must limit the owners’ rights to an income stream,

  not occupancy. The management must retain ownership of the common property. In addition,

  owners will not have the right to opt out of the management agreement. The hotel must

  provide a full range of facilities consistent with industry accepted hotel features.

All the planned changes will take effect from the promulgation of amendments to the

Foreign Acquisitions and Takeovers Regulations that are necessary to implement some of the

measures.

Revised foreign investment policy summaries will be released once the new regulations

are made.