Foreign investment review board (FIRB) approval for land investments in Australia

The Foreign Investment Review Board (FIRB) is an Australian government department that assesses applications from foreign persons who would like to invest or buy a home in Australia.

It is important to consider whether as a foreign person, you need FIRB approval to purchase land in Australia.

If you are an Australian citizen living overseas, a New Zealand citizen or a foreign person who has permanent residency you do not need FIRB approval.

What is a Foreign Person?

The Foreign Acquisitions and Takeovers Act 1975 (FATA) describes a foreign person as:

• any individual who does not ordinarily reside in Australia; or
• a corporation or trustee of a trust in which:
  • an individual not ordinarily resident in Australia, a foreign corporation, or a foreign government, holds a substantial interest (at least 20%); or
  • two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation, or a foreign government, that hold an aggregate interest of at least 40%; or
  •  a foreign government.

Different rules apply to investments by foreign government investors compared with private investors. These additional requirements apply regardless of the foreign government. 

This article will not be considering foreign government investment but rather private investments.

If you are a Temporary Resident

If you are a temporary resident in Australia, you will need approval from FIRB and you can only purchase one established dwelling and you must live in it. If you cease to live there, you must sell it.

If you want to buy an investment property it must be a new property or vacant land to build a new property.

If you are buying the property with an Australian citizen or permanent resident as ‘joint tenants’ and you are a spouse, you will not need FIRB approval. 

This does not apply if you purchase the property as ‘tenants in common’ as you will require FIRB approval.

If you are a Foreign Person Investor

As a foreign investor you will need FIRB approval.

The investment property must be a new property or vacant land where you are going to build a new property.

You cannot buy an established dwelling.

There are some exceptions to this, and they are:

• The property developer has obtained an exemption certificate for the new property that you are buying
• It is a property you inherited
• The property was part of a family court matrimonial settlement
• A court awarded you the property by way of an order of the court.

If you are a Foreign Person buying with an Australian Citizen or Permanent Resident

You are exempt for FIRB approval if you buy the home as ‘joint tenants’’ and you are in a genuine spousal relationship.

What are the FIRB charges?

FIRB fee will vary depending on the value of the residential property or land that you want to purchase but the following is an example of the costs:

• $1 million or less: $5,600
• $1 million to $1,999,999: $11,300
• $2 million to $2,999,999: $22,700
• $3 million to $3,999,999: $34,000
• $4 million to $4,999,999: $45,400
• $5 million to $5,999,999: $56,700
• $6 million to $6,999,999: $68,100
• $7 million to $7,999,999: $79,500
• $8 million to $8,999,999: $90,900
• $9 million to $9,999,999: $102,300
• $10 million or higher: You will need to contact the Australian Taxation Office for a fee estimate (fees are tiered per million).

Will I have to pay the foreign person stamp duty surcharge?

Foreign Nations who want to buy or invest in residential property in Victoria New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania will need to pay a stamp duty levy and, in some states, a land tax surcharge.

The following information is current as at the date of this article. You should make sure you check before considering any purchase as duty and revenue law in Australia and its states changes regularly.

New South Wales

An 8% stamp duty surcharge and a 2% land tax surcharge apply to property purchased in New South Wales.

In addition to this, foreign citizens are no longer entitled to the 12-month deferral on the payment of stamp duty for off the plan purchases of residential property.

Victoria

The additional duty rate is 8 per cent. This includes units and houses which have a portion of their value considered as land for tax purposes.

Increased stamp duty is the only surcharge that will apply.

In addition, the VIC government’s absentee owner surcharge or “ghost tax” on land increased from 0.5% to 1.5% on 1 January 2017. This will increase to 2% from 1 January 2020.

This is an annual fee based on the value of the land you own in Victoria.

Queensland

A 7% stamp duty surcharge and a 2% land tax surcharge (absentee) apply to properties in Queensland. The absentee tax applies to foreign individuals who do not ordinarily reside in Australia.

You will be considered an absentee if you:

• Were away from Australia as at 30 June or;
• Have been away from Australia for more than 6 months in total during a financial year.

It no longer applies to Australian citizens or Australian permanent residents living or working overseas.

In addition to this, the surcharge only applies to freehold land that has a total taxable value of $350,000 or more.

An additional new 2% land tax surcharge has been introduced on foreign companies and trusts from 30 June 2019.

South Australia

A 7% stamp duty surcharge applies to contracts entered after 1 January 2018.

Western Australia

A 7% foreign citizen stamp duty surcharge applies to contracts signed after 1 January 2019.

Tasmania

A 3% Foreign Investor Duty Surcharge (FIDS) applies for purchases of residential property while a 0.5% surcharge applies for purchases of primary production land in Tasmania.

How do I lodge a FIRB application for land investments?

You can lodge your application on the Australian Tax Office’s Residential Real Estate Application Form.

You will need to provide your contact details, full legal name, address of the property and pay the required FIRB approval fee.

Also, you must have your passport and Australian visa details (if applicable).

You should be aware you cannot apply for FIRB approval until you have chosen a property to buy. FIRB does not give pre-approvals.

Want to know more on FIRB approvals for land investments?

At FC Lawyers we have an expert team who have assisted numerous clients with their FIRB requirements and obligations relating to land investments.

Contact the team to discuss your Foreign Investment Review Board approval needs for land investments today.