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Foreign investment policy: forced divestiture of residential real estate involving Australian trustee.



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SENATOR

THE HON ROD KEMP

ASSISTANT TREASURER

PRESS RELEASE V________________J

EMBARGO: Immediate Release

FOREIGN INVESTMENT POLICY: FORCED DIVESTITURE OF RESIDENTIAL REAL ESTATE INVOLVING AUSTRALIAN TRUSTEE

The Government today gazetted a divestiture order under the Foreign Acquisitions and Takeovers Act 1975 (FATA) to require the ordered parties to dispose of their interest in specified residential real estate within 3 months.

The special facts of this case were that a foreign person used an Australian trustee to acquire developed residential real estate without seeking prior approval. The use of an Australian trustee to acquire real estate does not exclude such acquisitions from the application of the FATA. Under Section 12A of the FATA, where the beneficiaries of the trust are foreign, the trustee is deemed to be foreign.

If the foreign person in this case had sought approval to acquire the property, either directly or through an Australian trustee, approval would not have been forthcoming. Accordingly, the issue of an order for divestiture in this case is in accord with the Government’s foreign investment policy.

Foreign Investment Policy in Relation to Developed Residential Real Estate

The Government’s foreign investment policy in relation to acquisitions of developed residential real estate is very restrictive. All acquisitions of residential real estate by foreign interests require prior approval and should be submitted to the Foreign Investment Review Board for examination. In most

cases, acquisitions are not permitted.

• Approval of acquisitions by foreign interests of developed residential real estate is limited to foreign companies (with significant operations in Australia) buying homes for named senior executives residing in Australia and foreign nationals temporarily resident in Australia for more than 12 months. The property must be used as the party’s principal place of residence, it cannot be rented or leased and must be sold when the executive or foreign national ceases to reside in Australia.

Under Section 21(4) of the FATA, where a foreign person has acquired without approval an interest in Australian urban land and that acquisition is deemed contrary to the national interest, the foreign person may be directed to dispose of that interest within a specified period to an approved purchaser.

11 December 1996 CANBERRA Contact Officer: Mr Mike Waslin Ph. (06) 263 3886