Foreign investment fee increases to fund housing reform agenda

The federal government has announced that increased foreign investment fees will apply to notifications and applications made on or after 29 July 2022, as part of Labor’s pre-election commitment to increase fee schedules for foreign investors.

Under the Foreign Acquisitions and Takeovers Act 1975, foreign investors are required to submit applications for approval to the Foreign Investment Review Board (FIRB) if they plan to invest in or purchase Australian residential, agricultural or commercial land, and certain mining tenements.

There are also a range of fees and penalties applicable for these applications.

As of this Friday (29 July), the fees will be doubled.

For example, an application for a single action involving residential land worth less than $75,000 will fetch a fee of $4,000, rising to $13,200 for residential land worth $1 million or less.

The fee then increases by $26,400 for every $1 million of consideration after that (i.e. $26,400 for residential land worth $2 million or less; $52,800 for residential land worth $3 million or less etc.).

This continues to a maximum fee of $1,045,000 for residential land worth over $40 million.

Other fees applies for agricultural land, commercial land, tenements, businesses and entities.

Fees apply to all foreign persons, including foreign government investors and will be indexed in subsequent financial years. 

For residential land applications, which are lodged through the Australian Taxation Office (ATO) Portal, applicants will receive an on-screen confirmation containing the fee details. 

Fees are generally payable at the time an application or notice is lodged.

Funds raised to go towards housing agenda

Speaking on Friday, Federal Treasurer Jim Chalmers said that the new fee schedule will “raise $455 million over the forward estimates that will help us pay for our foreign investment regime and also to fund our housing affordability policies, particularly our Help to Buy policy”.

Under Help to Buy, the Labor government intends to pay an equity contribution of up to 40 per cent of the purchase price for a new home, and up to 30 per cent for an existing home. 

The scheme will be eligible to 10,000 households every year. 

The federal opposition has previously suggested that Australians aged 18 and over with a taxable income of up $90,000 per annum or couples with a combined figure of $120,000, who currently don’t own or have an interest in a residential property, will be eligible for the initiative. 

Under Help to Buy, home buyers will only be required to have a deposit of 2 per cent (or more) can qualify for a standard home loan with a participating lender. 

Mr Chalmers said the move to increase foreign fees was also “necessary” given “the state of the budget” that Labor inherited from its “predecessors”.

He stated: “Foreign investment is a good thing. It's welcome when it's in Australia's national interest. This will make a very small difference to the cost of buying a property in Australia, but it will make a very big difference to Australians and to their Budget, because it means we can fund other priorities. 

“So [this is] a difficult decision, but a necessary decision, because of the pretty serious fiscal constraints that we've inherited from our predecessors.”

With Parliament resuming this week, Mr Chalmers is scheduled to provide an economic update on Thursday (28 July).

Speaking of the update, he said: “There's no point tiptoeing around or pretending away the serious challenges that we have in our economy — high and rising inflation, falling real wages, energy and food insecurity which comes from uncertainty around the world. 

“And our ability to deal with a lot of these challenges is constrained in pretty serious ways by the trillion dollars of debt that we've inherited as a new government. So we will continue to do our best to bring people together. “

In a joint media release between the Treasurer and Julie Collins MP (the Minister for Housing, Minister for Homelessness and Minister for Small Business), Stephen Jones MP ( the assistant treasurer and financial services minister) and Dr Andrew Leigh (the Assistant Minister for Competition, Charities and Treasury), the Labor politicians outlined that while “Australia welcomes foreign investment that is in Australia’s interests,” they wanted to ensure that “the foreign investment framework is not borne by Australians”.

“We will always put Australian interests first. That means ensuring Australians benefit from foreign investment in Australia,” the joint release reads.

“Tackling housing affordability and helping more Australians into home ownership is a significant challenge and it’s one this government takes seriously.

“The Albanese Government has an ambitious housing reform agenda to address this challenge. Changes to foreign investment fees and penalties will help to deliver this reform agenda including Help to Buy a new program to assist Australians into home ownership.”

[Related: Treasurer Chalmers outlines economic priorities]