* As of 29 July 2022, fees payable to the Foreign Investment Review Board (FIRB) for applications for foreign investment transactions will double under newly imposed regulations. *
Background
During the 2022 federal election campaign, the Labor Party committed to addressing housing affordability in Australia with its “Help to Buy” initiative, which proposes to cut the cost of buying a home by up to 40%.
To fund this programme, Labor planned to double foreign investment screening fees and financial penalties, resulting in an estimated additional $455 million FIRB fees becoming payable by foreign investors over the next 4 years. As the increase resulted from an election promise, no public consultation was undertaken on the matter, according to the Explanatory Statement for the regulations.
The Result
On 21 July 2022, the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Doubling) Regulations 2022 (Cth) was introduced by the Federal Government, which effected the doubling of foreign investment application fees. It is also expected that penalties for non-compliance with foreign investment regulations will be doubled.
Under the FIRB regime, all applications made are subject to a prescribed fee. With effect from 29 July 2022, the lowest possible application fee doubled from $2,000 to $4,000, with the maximum fee also doubling from $522,500 to $1.045 million.
This fee increase will apply to all foreign investment requiring confirmation of no objections from FIRB (commonly referred to as “FIRB Approval”). Such investments include certain foreign acquisitions of Australian land, Australian businesses or interests in an Australian business, as well as internal reorganisations where a foreign person acquires an interest, exemption certificate applications and the establishment of an Australian business by a foreign person.
For foreign investors, the new fee regime is likely to have a significant effect on plans to invest within Australia. Careful consideration must be given to the calculation of anticipated FIRB application fees to be factored into budgeted transaction costs and forecasting. The timeframe for FIRB to consider an application does not start until the relevant application fee has been paid in full.
The new fees are as follows:
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Action
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Fees until 28 July 2022 (inclusive)
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New fees from 29 July 2022 (inclusive)
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Residential
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- Fee increases by $13,200 for every $1 million of consideration.
- Fees start at $6,600 for acquisitions of $1 million or less, rising to a maximum of $522,500 for acquisitions of more than $40 million.
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- Fee increases by $26,400 for every $1 million of consideration.
- Fees start at $13,200 for acquisitions of $1 million or less, rising to a maximum of $1,045,000 for acquisitions of more than $40 million.
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Land
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Agricultural
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- Fee increases by $13,200 for every $2 million of consideration.
- Fees start at $6,600 for acquisitions of $2 million or less, rising to a maximum of $522,500 for acquisitions of more than $80 million.
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- Fee increases by $26,400 for every $2 million of consideration.
- Fees start at $13,200 for acquisitions of $2 million or less, rising to a maximum of $1,045,000 for acquisitions of more than $80 million.
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Commercial (including tenements)
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- Fee increases by $13,200 for every $50 million of consideration.
- Fees start at $6,600 for acquisitions of $50 million or less, rising to a maximum of $522,500 for acquisitions of more than $2 billion.
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- Fee increases by $26,400 for every $50 million of consideration.
- Fees start at $13,200 for acquisitions of $50 million or less, rising to a maximum of $1,045,000 for acquisitions of more than $2 billion.
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Businesses and entities
(other than land entities)
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Starting an Australian business (including a national security business)
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$2,000 flat fee. |
$4,000 flat fee. |
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Entering agreements & altering documents
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$13,200 flat fee. |
$26,400 flat fee. |
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Internal reorganisations
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$13,200 flat fee. |
$26,400 flat fee. |
Further Information
If you require further information or would like to discuss how the increase in FIRB fees might affect your transaction, please contact Rohan Harris, Solomon Miller, Andrew Parlour, Rory Maguire, Ellen O’Neil or Jaqueline Wilson from our Corporate & Commercial Advisory and Mergers and Acquisitions teams.
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