The proposed changes to the FATA introduce a new concept of “Australian land”, which captures the existing “Australian rural land” concept and expands on the existing “Australian urban land” concept. Australian land now means agricultural land, commercial land, residential land or a mining or production tenement. These types of land are not intended to be mutually exclusive, so an area of land could fall under several types of Australian land.
The acquisition of an interest in Australian land is a significant action and also a notifiable action which enlivens the powers of the Treasurer to make orders under the FATA. An interest in Australian land is broadly defined, and includes:
- a legal or equitable interest in Australian land (subject to certain exceptions, such as an interest under a lease, a licence, a unit in a unit trust, an interest in a profit à prendre or certain other profit sharing arrangements);
- an interest in certain types of securities of the entity that owns the land which entitles the holder to occupy a dwelling;
- an interest as lessee or licensee in a lease or licence that exceeds 5 years;
- a profit à prendre if the term of the agreement exceeds 5 years;
- an interest in a share in an Australian land corporation or agricultural land corporation (similar to the concept of “urban land corporation” under the current law); and
- an interest in a unit in an Australian land trust or agricultural land trust, or an interest in the share of the trustee of such a trust.
Interest in agricultural land
Agricultural land is defined under the Bills as land in Australia that is used, or could reasonably be used, for a primary production business within Australia’s taxation laws. This includes land which 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 acquisition of an interest in Australian land (including agricultural land) also captures the acquisition of any interest in the shares of an agricultural land corporation, which will be defined in the regulations and is expected to include any corporation where the value of its eligible agricultural land assets exceeds 50% of the value of its total assets.
The Australian government now requires all foreign persons to notify the Australian Taxation Office (ATO) of existing interests in agricultural land before 31 December 2015. Foreign persons are required to notify new acquisitions of interests in agricultural land to the ATO within 30 days.
Interest in mining or production tenement
A mining or production tenement is defined under the Bills as a right under a law of the Commonwealth, a State or a Territory to recover minerals, oil or gas in Australia (including offshore). It includes a right to preserve such a right (eg retention titles), but does not include a right to recover minerals, oil or gas for the purposes of prospecting or exploring for minerals, oil or gas. Minerals includes coal or ore.
This definition reverts to the position under earlier versions of the Policy where only the acquisition of an interest in producing tenements or licences required notification.