Publications / International
The new Significant Investor Visa was launched on 24 November 2012. The new visa program provides Australian companies and fund managers with an opportunity to market products to high net worth individuals seeking investment immigration, particularly from China.
This new visa requires applicants to invest at least A$5 million in Government bonds, managed funds or private Australian companies, and to be nominated by a State or Territory Government.
Visa applicants must:
- submit an expression of interest in SkillSelect
- be nominated by a State or Territory government, and
- make investments of at least A$5 million into complying investments.
Applicants will be granted a number of concessions which include:
- no points test
- no upper age limit, and
- reduced residency requirement.
Successful applicants will initially be granted a four year provisional Subclass 188 visa. Investors will be required to maintain their investment of at least A$5 million in complying investments for a minimum of four years before being eligible to apply for a permanent (Subclass 888) visa.
State or Territory nomination
Each State/Territory have their own criteria for nomination.
The NSW Government will require that applicants invest 30% of the required A$5 million in NSW Waratah Bonds. The South Australian Government will require that applicants commit to conducting 6-monthly surveys during the provisional visa term (at least 4 years).
The applicant must also commit to meeting the permanent (Subclass 888) visa 30 November 2012 requirements. One of the permanent visa requirements is that the main applicant must have held a minimum required average of A$3 million investment in a South Australian ASIC registered proprietary business which undertakes its business in South Australia for any 2 years in the 4 years of the provisional 188 visa. The South Australian Government has indicated that it will be flexible in assessing applicants
against these requirements. Applicants will also be required to visit South Australia and meet in person with a representative of the business migration unit.
The Western Australian Government will consider applicants on a case by case basis with the contribution to the Western Australian economy being the prime factor considered for approval of State nomination. Further, applicants must have business and/or personal assets of at least A$5 million which are available for investment in a complying investment(s) in Australia immediately prior to visa grant, and an additional A$50,000 which is available for domestic and/or settlement purposes.
The Tasmanian Government will require applicants to provide details of the proposed investment in Tasmania, including details of how that investment will benefit the Tasmanian economy.
The other States/Territories indicate they are currently finalising their criteria for nomination under the Significant Investor Visa. However it is likely they will require applicants to make an investment or investments which satisfy a
’benefit to the State/Territory’ test, or equivalent.
Complying investments for the Significant Investor Visa stream include:
- Commonwealth, State or Territory government bonds
- certain managed funds, and
- direct investment into Australian proprietary companies.
To be complying, a managed fund must satisfy the following:
- Must be a managed investment scheme in which members acquire interests in the scheme - the regulations do not require the scheme to be registered with ASIC and therefore the scheme can be an unregistered scheme (such as a wholesale fund)
- The interests are not able to be traded on a financial market and no representation has been made to any member of the managed investment scheme that the interests will be able to be traded on a financial market
- The issue of the interests is covered by an Australian Financial Services Licence
- Investment may be made in the fund via an Investor Directed Portfolio Service
- Be open to the public, and
- Investment is limited to categories of investment specified by the Minister.
The Minister has specified the following categories of permitted investments in managed funds:
- infrastructure projects in Australia
- cash held by Australian deposit taking institutions
- bonds issued by the Commonwealth Government or a State or Territory government Brisbane
- bonds, equity, hybrids or other corporate debt in companies and trusts listed on any Australian stock exchange
- bonds or term deposits issued by Australian financial institutions
- real estate in Australia
- Australian Agribusiness, and
- other managed funds that invest in the above list of assets.
A direct investment in an Australian company, to be classed as a ‘complying investment’, must meet the following criteria:
- the company is registered with ASIC
- the company has an ABN
- the company is not listed on an Australian stock exchange
- the company has not been established wholly or substantially for the purpose of satisfying this definition
- the applicant has acquired an ownership interest in the company, and
- the company must operate as a “qualifying business.
A qualifying business relevantly means an enterprise that is operated for the purpose of making profit through the provision of good, services or goods and services (other than the provision of rental property) to the public, and is not operated primarily or
substantially for the purpose of speculative or passive investment.
Speculative investments are those involving the purchase or sale of something for the sole purpose of making a capital gain, and includes business ventures based on a high level of speculation with a great risk of potential failure, particularly if success is dependent on external factors. Passive investments are money raising activities that, similar to collecting rent from rental properties, require little or no input.
It should be noted that the complying investment made by the visa applicant may be a passive investment. It is the company in which the visa applicant invests which must operate business which is not for the purpose of passive investment.
McCullough Robertson are abreast of the latest developments that may affect decisions by new investors to make a migration investment in Australia. We have the right mix of knowledge and expertise to advise on investment associated with
the new visa stream. We can help you identify the right investment projects and opportunities that will comply with the new visa requirements.
Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.