Agricultural land is defined under the new regime as land that is used, or that could reasonably be used, for a primary production business. This includes land that is partially used for a primary production business, or land where only part of the land could reasonably be used for a primary production business.
The definition of a primary production business under the new regime is the same as that which applies under Australia’s income tax laws. It includes cultivating or propagating plants, maintaining animals for the purposes of selling them or their produce (typical animal farming), manufacturing dairy produce, conducting operations relating to catching fish and other water animals, pearl farming, and plantation operations (planting, tending, felling and transporting trees). An important consideration in determining whether a primary production business is being carried on is whether the agricultural activity has a commercial purpose or character.
Consideration must also be given to whether the land could reasonably be used for the purposes of carrying on a primary production business. Factors that will be considered in assessing this are the zoning of the land, the history of use of the land, the characteristics of the land and any applicable lease or licence conditions or limitations.
Agribusiness is a new concept introduced into the regime. It includes any Australian entity or business that uses its assets in the carrying on of a business wholly or partly4 in any of a number of specified classes of business set out in the Australian and New Zealand Standard Industrial Classification Codes. These classes include agriculture, forestry and fishery businesses and certain food product processing/manufacturing businesses (meat, poultry, milk and cream, fruit and vegetable and seafood processing, together with cheese and other dairy, oil and fat, grain mill product and sugar manufacturing). However, certain food product businesses are excluded from the definition of an agribusiness. These include cured meat and smallgoods manufacturing, ice-cream manufacturing, cereal, pasta and baking mix manufacturing, bakery product manufacturing, confectionery manufacturing and a number of other abstract food products including food coloring, herbs, coffee and frozen meals.
Investors should also note that the definitions of agricultural land and agribusiness are not mutually exclusive. In many instances the acquisition of an agribusiness will involve the acquisition of an interest in agricultural land. In such cases, the acquisition of the interest in agricultural land may require notification to FIRB despite the value of the acquisition of the agribusiness being below the agribusiness monetary threshold. However, it will not always be the case that the acquisition of an agribusiness will include as part of it the acquisition of an interest in agricultural land – for example, food processing or manufacturing operations such as an abattoir may not be located on agricultural land.
A new fee regime has also been introduced, as noted in the above table. Substantial fees are now applicable to all relevant acquisitions in the agri sector. At the lower end, applications relating to acquisitions of agricultural land that are valued at A$1 million or less will incur a fee of A$5,000. However, acquisitions for agricultural land valued in excess of A$1 million will incur fees between A$10,000 and A$100,000, depending on the value of the property. For agribusiness investments, a fee of A$25,000 applies where the value of the acquisition is A$1 billion or less, with the fee for acquisitions above this threshold jumping to A$100,000.