Illegal foreign investors soon to face strict new laws
Any foreign investor that is purchasing property in Australia will soon face heavy fines and a three year jail sentence under a new planned government crackdown.
From 1 December 2015, new plans will come into effect where foreign buyers will have to pay a fee of $5,000 on properties up to $1 million and a fee of $10,000 for properties over $1 million with an extra $10,000 for every $1 million thereafter.
These new rules will be enforced by the Australian Taxation Office and the fees collected will be used to fund the policing of the new rules.
Prime Minister Tony Abbott believes that the increase in fees and tighter controls are required to help Australians compete for property more fairly in order to help the property affordability issue as foreign investors tend to drive up property prices. However, foreign investment is one of the main drivers of new housing developments being given the green light and helps to ease the pressure on rental prices.
But it’s not just foreign investors who could face steep fines of $127,000. Foreign companies who breach the rules could be faced with a $637,500 fee, whilst third parties such as real estate agents, developers or lawyers who help assist illegal buying from foreigners will also face civil and criminal penalties, including fines of $42,500 for individuals and $212,500 for corporate breaches, and a jail term of up to three years.
Foreign investors that have illegally bought Australian real estate will be forced to sell the property with penalties to ensure no profit is made.
A statement from the government states, "We will ensure stronger enforcement of new and existing foreign investment rules by transferring all residential real estate functions to the Australian Taxation Office".
"The ATO will use its data-matching systems to identify possible breaches and the Commonwealth will pursue those foreign investors who break the rules."
Foreign investment is important to Australia, and according to figures from the Foreign Investment Review Board’s annual report, foreign investment in Australian real estate doubled to $34 billion in just one year from 2012-13 to 2013-14. One of the major countries that invest in property in Australia is China who spent $12.4 billion on real estate last financial year.
Published on 6th of May 2015 by Marty Stanowich