Changes to foreign investment regulation in Australia

There is significant regulation of foreign investment in Australia and a number of reforms have been made to Australia’s foreign investment regime in recent months. The latest edition of our Changes to foreign investment regulation in Australia publication provides a summary of these changes, including specific issues relating to investments in the resources and infrastructure sectors.

The recent reforms include:

• new legislation and regulations that came into effect on 1 December 2015, including reforms to the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)
• new tax conditions announced in February 2016 that attach to all foreign investment applications, and
• changes to the regulations which mean that, effective 31 March 2016, FIRB formally reviews the sale of “critical infrastructure assets” by State and Territory governments to both public and private foreign investors.

As with most regulatory reforms and tax changes, the ‘devil is in the detail’ of these reforms. Some of these changes can be welcomed as they have simplified the foreign investment application process and clarified some ambiguities in FIRB’s policies. Others provide for increased scrutiny with respect to acquisitions of certain asset types, which investors will need to factor into their bid plans. The new tax conditions mean that investors will have to carefully consider the likely Australian tax consequences of making the investment due to the additional compliance and reporting obligations the tax conditions impose, as well as the potential penalties for non-compliance.

Given these circumstances, we strongly recommend foreign investors seek early professional advice to navigate through the process of investing in Australia, even if they have successfully invested previously.

We hope you find our Changes to foreign investment regulation in Australia publication useful. Please contact one of the advisers listed if you have any questions.

Publication team

Primary drafting: Sarah Lilly and Raymond Lou. Additional input and review: Liz Allnutt, Keira Brennan, Michael French, Anthony Latimer, Richard B Lewis, Andrew Spalding, Gary Thomas and Michelle Ralston.