Further to our April 2023 update , the Foreign Acquisitions and Takeovers Amendment (Register of Foreign Ownership and Other Matters) Regulations 2023 and Foreign Acquisitions and Takeovers (Register Notices) Data Standard 2023 (which were previously in consultation) have now been finalised, and the new Register of Foreign Ownership of Australian Assets (Register) under Part 7A of the Foreign Acquisition and Takeovers Act 1975 (Cth) (FATA) will commence from 1 July 2023.
Background
FATA requires foreign persons to lodge a report with FIRB when an acquisition the subject of a no objection notice (NON) or exemption certificate (EC) has completed, and when the relevant shares, land, assets or tenements have been disposed of (Part 5 Obligations). There are also certain separate reporting obligations in respect of acquisitions and disposals of certain land and water entitlements.
The commencement of the Register alters these reporting obligations. Nothing about what transactions require notification to the Foreign Investment Review Board (FIRB) under FATA is altered by the Register. Rather, the new provisions create separate post-completion and ongoing administrative reporting obligations, as described in more detail below.
Recap of changes
With the commencement of the Register, the following broad categories of reporting come into effect:
Non-land acquisitions: The following matters must be reported to the Australian Taxation Office (ATO ):
Completion of non-land acquisitions that are subject to mandatory FIRB approval provisions (ie. notifiable actions and notifiable national security actions).
Completion of non-land acquisitions that are subject to voluntary FIRB approval provisions (ie. significant actions and reviewable national security actions) in respect of which a NON has been issued, or which are covered by an EC, or which have been called in.
Any 5% or more change (up or down) in interests held in businesses/entities that are subject to the above reporting obligations.
Where a person already owns an interest where the acquisition of that interest would have been a notifiable action or notifiable national security action (ie, a mandatory FIRB approval), and the person becomes to be a foreign person.
Cessation events in respect of the circumstance that led to any of the above notifications (eg, disposal of the interest or change of status as a foreign person).
Land acquisitions: The following matters must be reported to the ATO (regardless of whether the relevant acquisition needed FIRB approval): All acquisitions of legal interests in land (including land rich entities where more than 50% of the assets are interests in Australian land) and exploration tenements. All acquisitions of equitable interests in long-term leases of agricultural land. Any change in the nature of the land held (eg. from residential to commercial). If a person that already owns the foregoing land interests and becomes a foreign person. Cessation events in respect of the circumstance that led to any of the above notifications (eg, disposal of the interest or change of status as a foreign person).
All acquisitions of legal interests in land (including land rich entities where more than 50% of the assets are interests in Australian land) and exploration tenements.
All acquisitions of equitable interests in long-term leases of agricultural land.
Any change in the nature of the land held (eg. from residential to commercial).
If a person that already owns the foregoing land interests and becomes a foreign person.
Water acquisitions: The following matters must be reported to the ATO (regardless of whether the relevant acquisition needed FIRB approval): Acquisitions of certain water entitlements that are still held at the end of a financial year. Certain changes in the nature of the water interest held (such as an increase in water share). If a person that already owns the foregoing water entitlements becomes a foreign person and holds the relevant interest at the end of the financial year. Cessation events in respect of the circumstance that led to any of the above notifications (eg, disposal of the interest or change of status as a foreign person).
Acquisitions of certain water entitlements that are still held at the end of a financial year.
Certain changes in the nature of the water interest held (such as an increase in water share).
If a person that already owns the foregoing water entitlements becomes a foreign person and holds the relevant interest at the end of the financial year.
The ATO may appoint “infringement officers” as part of their compliance function in relation to these notification obligations.
Notifications to the ATO will need to be made via their new online services for foreign investors portal (ATO Portal ). Unlikely the current FIRB platform, the ATO Portal cannot be accessed without a myGovID.
All acquisitions of legal interests in land (including land rich entities where more than 50% of the assets are interests in Australian land) and exploration tenements.
All acquisitions of equitable interests in long-term leases of agricultural land.
Any change in the nature of the land held (eg. from residential to commercial).
If a person that already owns the foregoing land interests and becomes a foreign person.
Acquisitions of certain water entitlements that are still held at the end of a financial year.
Certain changes in the nature of the water interest held (such as an increase in water share).
If a person that already owns the foregoing water entitlements becomes a foreign person and holds the relevant interest at the end of the financial year.
Transitional provisions
Importantly:
In relation to any transaction completed prior to 1 July where notification of completion of the action was not made to FIRB before 1 July, foreign persons will have up to 30 July to submit their notification to the ATO under the new reporting regime.
ATO Portal access
Due to the current structure and requirements of the ATO Portal, Australian advisers may not be able to submit notifications on behalf of foreign investors (although this may change if employee privacy concerns and client confidentiality issues can be satisfactorily resolved). Instead, foreign investors and their representatives will need to set up their access to the ATO Portal by (1) designating a person to obtain a myGovID and (2) registering the foreign investor (ie, the entity that needs to make the notification).
A myGovID account is personal to each individual and allows users to establish a digital ID to authenticate their use of Australian Government websites and services (including the ATO Portal).
Detailed instructions for setting up a myGovID and then registering the foreign investors to make notifications to the Register can be found here . The following will be needed to set up ATO Portal (and myGovID) access:
A mobile phone with the myGovID app installed.
Basic identification information of the individual creating the account and the foreign investor needing to make the notification, including information on the country of origin of the owner(s) of the foreign investor.
(Depending on the circumstances) further identity documents/information (e.g. passport or birth certificate) and documents/information relating to prior investments in Australia (e.g. ARN notification letter issued by the ATO).