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Purchasing Property for Others - You may fall foul of the foreign investment framework

Under Australia’s foreign investment framework, Australian citizens, permanent residents, exempt foreign persons, and foreign persons who are eligible for approval may be subject to strict penalties if purchasing a dwelling on behalf of, or for the benefit of, a foreign person (including family members) who has either:

  • not received approval to purchase the dwelling or the interest in the dwelling; or
  • would generally be ineligible to purchase the dwelling or the interest in the dwelling.

The foreign person on behalf of who an interest is acquired may also have breached the rules and be subject to penalties which can be quite harsh. An interest in residential real estate is defined broadly to include any legal or equitable interest in the land, including when a person has any right to have the interest transferred to himself or herself, and despite the manner in which the interest arose.

The Foreign Acquisitions and Takeovers Act 1975 (Cth) also allows for the tracing of interests through multiple entities to help determine who the ultimate acquirer of the interest in the dwelling is. The Treasurer, or his or her delegate, may issue a tracing notice to a person requiring further information about ownership of a dwelling. Failure to comply with a tracing notice may attract a penalty of imprisonment for up to six months or 30 penalty units ($6,300), or both.

Strict penalties (including civil and criminal penalties) may apply for breaches of Australia’s foreign investment framework.

Cases of non-compliance with Australia’s foreign investment framework may also be brought to the attention of law enforcement agencies and other Commonwealth departments such as the Department of Immigration and Border Protection.

Should you need advice on your purchase of property and whether it complies with the Australia’s Foreign Investment Framework please contact us at Russell Kennedy Lawyers 02 8987 0000.

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