[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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Government’s specified Foreign Investment Policy from time to time. The FATA requires “foreign persons” or foreign government investors who propose to acquire interests in Australian real property, or certain interests in Australian companies or businesses, to obtain FIRB approval prior to such acquisition taking place. Who is considered a Foreign Person? The concept of a “foreign person” as set out in the FATA is far reaching and includes not only individuals who are not ordinarily resident in Australia, but will also include: • a corporation or the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; and • a corporation or the trustee of a trust in which two or more persons, who together hold an aggregate substantial interest , are: (a) not ordinarily resident in Australia; (b) a foreign corporation; or (c) a foreign government entity. A “substantial interest” for the purposes of the above means an interest of 20% or more in the relevant company or trust. Acquisitions of Residential and Commercial Property As of 1 April 2025, foreign persons, including temporary residents and foreign-owned companies are not permitted to buy established dwellings in Australia. An established dwelling is a dwelling on residential land that is not a new dwelling but excludes commercial residential premises such as hotels and caravan parks. This includes foreign-owned companies purchasing an established dwelling for redevelopment. The temporary ban will last until 31 March 2027,
with a review to be undertaken to determine if the ban should be extended beyond this period. Some exemptions apply to the ban. These include: • temporary residents purchasing an established dwelling as their principal place of residence; • cases in which the investment will significantly increase housing supply; and • foreign purchasers involved in the Australia Labour Mobility (PALM) Scheme. Purchases for vacant residential land developments or investments that fall within an exempt category will nonetheless be subject to certain restrictions and high scrutiny by the ATO. . Acquisitions of interests in Australian Companies and Businesses As a general rule, foreign persons are required to obtain FIRB approval prior to entering into an unconditional agreement to acquire substantial interests (i.e. interests of 20% or more) in Australian companies or businesses which have an annual turnover above a specified threshold. Acquisitions of interests in Australian companies by foreign government entities or in respect of Australian companies that conduct “sensitive business”, such as media, telecommunications, transport, military related industries and activities and securities technologies, are subject to a very strict foreign investment approval process. The relevant monetary thresholds which trigger the requirement of foreign investors to notify the FIRB and/or seek FIRB approval vary significantly depending on the characteristics of the target entity or business, and generally apply to businesses, including whether the foreign investor is from a certain Free Trade Agreement (FTA) partner nation. If the investor is from a
ILN Corporate Group – Establishing a Business Entity Series
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