The Australian Government welcomes international investment, indicating it provides additional capital for economic growth, creates employment opportunities, improves consumer choice and promotes healthy competition.
According to FIRB, at the end of 2014 the United States continued to be the largest destination of foreign investment in Australia. The United Kingdom was reported as Australia’s second largest destination of foreign investment followed by Japan, China and Canada.
In total FIRB recorded Australia’s 2014 total stock of foreign investment at almost $2.8 trillion, up from about $1.2 trillion a decade ago.
FIRB also noted United States direct investment in Australia had declined over the past decade from 39% to 24%. At the same time Japan’s direct foreign investment doubled to nearly 9.5% and Chinese investment had risen from negligible to nearly 4.5%.
In recent years Australia’s foreign investment approval process has been under the microscope.
Between the period 2012-2013 FIRB approved approximately 13,000 foreign investment applications. Between 2013-2014 approved foreign investment applications nearly doubled to just less than 25,000.
In response to community concern around the evident increase in foreign investment in Australia, particularly in our real estate and agricultural sectors, between 2014-2015 the Australian Government overhauled our Australian foreign investment policies and procedures.
1 December 2015 – stronger foreign investment regime comes into force
On the 1st of December 2015, Treasurer the Hon. Scott Morrison announced the launch of the Turnbull Government’s robust new foreign investment regime.
The new foreign investment regime is designed to provide stronger enforcement and a better resourced reporting system with clearer rules for foreign investors.
“The Government welcomes foreign investment that is not contrary to our national interest. Without foreign investment, production, employment and income would all be lower. But it is important that foreign investment is appropriately monitored to ensure that it benefits all Australians,” Mr Morrison said.
“Foreign investment rules need to be strong, effective and enforceable. The changes taking effect today follow the passage of the Government’s Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015. They provide greater compliance powers to the Australian Taxation Office (ATO) and introduce strict new penalties for those caught breaking the rules”.
Understand your obligations
The Australian Government expects all entities operating in Australia to maintain the highest standards of corporate behaviour, irrespective of whether those entities are Australian or foreign owned. Persons involved in operating these entities are expected to understand Australia’s regulatory environment and abide by all the relevant requirements.
These requirements are ongoing and may change from time to time. Accordingly, investors are expected to keep themselves up to date with any changes to their obligations that may occur.