FIRB Update: Important changes to the foreign investment regime in Australia

Foreign investors should be aware of the following important recent changes to Australia's foreign investment framework:

1. Following the recent implementation of the Australia-United Kingdom Free Trade Agreement, private investors from the United Kingdom will benefit from higher monetary screening thresholds for certain investments in Australia.
2. On 1 July 2023, the filing fees for foreign investment applications were indexed.
3. The Treasury has launched a new Foreign Investment website that replaces firb.gov.au. New foreign investment proposals will need to be submitted through the new Foreign Investment website.
4. The new Register of Ownership of Australian Assets commenced on 1 July 2023. The Register consolidates several existing registers and captures a broader range of interests. Foreign investors have new obligations to notify the Register of their interests in certain Australian assets.

Higher monetary screening thresholds for UK investors

The Australia-United Kingdom Free Trade Agreement commenced on 31 May 2023. As a result, private investors from the United Kingdom will now benefit from higher monetary screening thresholds under the foreign investment framework for certain investments by them in Australia (New UK FTA thresholds). The New UK FTA thresholds will apply to acquisitions of developed commercial land and non-sensitive businesses, with the applicable threshold increasing from $310 million to $1,339 million for these types of investments.

The higher New UK FTA thresholds are only available to acquirers of Australian assets who themselves are private investors from the United Kingdom. Investments that are made by Australian subsidiaries or special purpose vehicles of private investors from the United Kingdom do not benefit from the higher New UK FTA thresholds and instead are subject to the lower monetary thresholds for non-FTA partner country investors. It is also important to keep in mind that FIRB can review any investment into Australia, regardless of the applicable monetary screening thresholds, given the Treasurer's 'call-in' powers for transactions that may pose national security concerns.

Indexation of FIRB filing fees

The filing fees and the fee cap for foreign investment applications are indexed on the first day of each financial year. The indexed fees apply to applications made on the Foreign Investment website from 1 July 2023. Compared to the very steep fee increases that applied from 1 July 2022, this year's fee increases are modest, with the fees for a single action now ranging from $4,200 to a maximum of $1,119,100. The fees in the fee scale have seen an increase of approximately 5-7%. The full list of fees can be accessed on the Foreign Investment website.

Further details about the indexation calculations can be found in the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 (Cth) and the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2015 (Cth).

New Foreign Investment website

The Treasury has launched a new Foreign Investment website that replaces firb.gov.au. From 1 July 2023, new foreign investment proposals need to be submitted through the new Foreign Investment website. The new website will not affect applications that have been submitted through firb.gov.au and are currently under review.

As part of the new website, FIRB has taken the opportunity to update its guidance notes. The key updates are summarised below.

FIRB guidance notes updates and terminology changes - Click to Download

Here we outline key changes.

General references to FIRB have been changed to references to Foreign Investment or the Treasurer

1. 'FIRB website' > 'Foreign Investment website'
2. 'FIRB application' > 'Foreign Investment application'
3. 'FIRB application checklist' >  'Foreign Investment application checklist'
4. 'FIRB approval' > 'Treasurer approval'
5. firbcompliance@treasury.gov.au > foreigninvestmentcompliance@treasury.gov.au

FTA partners:

The United Kingdom has been added as an FTA partner

COVID-19 references:

• Certain references to COVID-19 have been removed
• E.g. 'The COVID-19 pandemic has placed food and grocery distribution and supply under significant pressure, revealing both the criticality and vulnerability of those networks.' has been replaced with 'Food and grocery distribution and supply networks are critical to Australia's national security.'

Australian media businesses:

The action 'acquiring an interest of 5% or more in an Australian media business' has been updated to reflect the change to 'acquiring a direct interest in an entity or business that wholly or partly carries on an Australian media business'

New Guidance Note 15: Register of Foreign Ownership of Australian Assets

FIRB has published a new guidance note on the Register of Foreign Ownership of Australian Assets that includes a detailed list of circumstances in which register notices must be given

New Register of Foreign Ownership of Australian Assets

The new Register of Foreign Ownership of Australian Assets (Register) commenced on 1 July 2023. The Register consolidates several existing registers and captures a broader range of interests. Foreign investors will need to be aware of their obligations to register investments in certain Australian assets. 

Source – MinterEllison