The new cost of foreign investment
The Australian Federal Government has just announced a significant increase to filing fees for foreign investors seeking to invest in Australia, in line with their recent election promise.
Under the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Doubling) Regulations 2022 (Cth), filing fees for all applications to the Foreign Investment Review Board (FIRB) on and from 29 July 2022 will effectively be doubled.
New increased filing fees
The minimum filing fee will increase from A$2,000 to A$4,000 for new business proposals and transactions valued at less than A$75,000. The maximum filing fee will increase from A$522,500 to A$1,045,000 for transactions valued at more than A$2 billion, agricultural land proposals over A$80 million and residential land proposals valued over A$40 million. Applications requesting variations of existing FIRB approvals and for internal reorganisations will increase from A$12,700 to A$26,400.
These increased fees are estimated to collect an extra A$455 million for the Federal Government from FIRB filing fees paid by foreign investors over the next four years. The change is being framed as a necessary action to fund what is now a much more robust foreign investment review regime.
Penalties for non-compliance with foreign investment rules will also be increased in future legislation.
What will this impact?
It is expected that FIRB’s preferred conservative approach (being that it encourages investors to apply for FIRB approval when in doubt, and to voluntarily apply under the significant and reviewable national security actions) which is already seen by some investors as an impediment to speedy investment, is likely to become even less appealing to investors.
Further, given that a FIRB application may be a material investment cost, foreign investors may now need to include the FIRB fees in their financial modelling and purchase price offered for an acquisition.
Although yet to be seen, hopefully this increase in funding for FIRB will reduce the at times significant delays in the FIRB review process often experienced by investors.
How can we assist?
It is important to identify the correct format that your application to FIRB should take to ensure the correct filing fee is imposed. Similarly, compliance with Australia’s foreign investment rules remains critical to avoid the risk of FIRB imposing increased penalties and (in extreme cases) divestment orders.
Our FIRB specialists can assist in identifying the correct application for your investment and manage your compliance requirements.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It 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.