The first penalty order for breaches of Australia’s foreign investments rules has been issued by the Federal Court of Australia, attracting $250,000 in penalties. The foreign investor has been penalised for purchasing multiple properties in outer Melbourne without receiving permission from the .
The Australian Taxation Office (ATO) identified the purchases using its extensive data sources as part of a multi-faceted compliance approach to detect foreign investors in breach of the Foreign Acquisitions and Takeover Act 1975 (FATA).
In July 2020, after a compliance investigation, the ATO filed proceedings in relation to six breaches of the FATA by Mr Vijay Balasubramaniyan, who purchased four properties without permission and simultaneously owned two established properties at once, in contravention of the FATA.
“We welcome this decision as it is the first penalty decision under the FATA. This serves as a clear deterrent to other foreign investors who believe they can operate outside of the law.” ATO Assistant Commissioner Keir Cornish said.
“There are obligations under Australian law for foreigners that have invested in, or plan to invest in Australian residential real estate. The ATO promotes voluntary compliance of the rules by foreign persons, but where foreign investors resist compliance action, stronger enforcement action is taken.”
Foreign investors are limited in the type of residential property they can acquire in Australia and must apply before doing so. Foreign investors found to be in breach of the FATA face civil penalties to enable the government to recapture capital gain or 25% of value of the property, whichever is greater.
The case shows the strength of ATO’s data driven approach to monitoring compliance with Australia’s foreign investment rules. The properties were sold as a result of ATO compliance action, making these houses available to Australian residents.
You can anonymously by completing a tip-off form on our website or by calling 1800 050 377. Lower penalties may apply for foreign persons who self-disclose a breach of the rules.
Background
Foreign investment is essential to Australia’s prosperity. It has helped build Australia’s economy and will continue to enhance the wellbeing of Australians by supporting financial growth.
The ATO is the co-administrator of the Foreign Acquisitions and Takeover Act 1975 (FATA), and has been responsible for monitoring compliance of foreign investment in residential real estate since 2015. In the period 2015-2021, 434 properties have been disposed as a result of ATO compliance action.
The ATO detects non-compliance by using systems and processes such as data matching, data analysis and monitoring, information sharing with other agencies and community referrals.
