What does it mean to be a foreign public investor in Australia?

Demand for fertile Australian land and other assets has remained high for many years and is not expected to slow down neither by foreign public investors nor by private companies. And this despite doubling taxes for foreign buyers by the Australian government.

In this article, we will look at some of the features of regulating foreign state investment in Australian assets.

Strict attitude

Before investing in an Australian business or land, a foreign government investor should be aware that their investment in Australia is much more stringent than that of a foreign investor representing the private sector.

IQ Decision UK provides professional assistance in solving problems of varying complexity in investing in business or buying land in Australia.

Before taking active action, it is recommended to determine to which category a foreign public investor belongs and under which regulation it falls. There are two such categories - one is regulated by the Foreign Acquisitions and Acquisitions Act 1975 (FATA) and the other by the 2015 Foreign Acquisitions and Acquisitions Regulation.

What's the difference? Let's first understand the definitions.

FATA defines a foreign public investor as a “foreign government” or a “separate public body”. It can also be a corporation, a trust trustee or a general partner of a limited liability company.

Details:

A foreign government is a body that is either a body of state power of a foreign state or part of it, or a political body of a part of a foreign state.

This means that the foreign government includes not only the central government body at the national level, but also the local levels of government (state, provincial, prefectural, etc.).

A separate public entity is an individual, corporation, or sole corporation that is an institution or instrument of a foreign state, may also be part of a foreign state, but may not be part of a political body of a foreign state.

In addition, a private body or organization may be classified as a foreign public investor if that body or organization intends to register an Australian business or land as an agent of a foreign government.

What to do if an investor is classified as a foreign public investor

If an investor is classified as a foreign government investor for FATA purposes, if he intends to start a business in Australia or to acquire land in Australia, there are certain permit restrictions for him.

For example, the value of the target business is not a factor in determining whether the proposed investment requires permission: a transaction or target value below certain monetary thresholds does not require approval by a non-state foreign investor.

Starting a business in Australia with it is only possible through permits. To start a business in Australia by a non-state foreign investor does not require approval from the authorities. However, such a permit will be required if you decide to register an existing Australian business in Australia.

Why is Australia still attractive for investment despite regulatory constraints?

1.  Australia is the only country in the developed world that has been showing steady annual growth without recession for 30 years with an average annual rate of 3%. This enviable indicator of sustainable growth proves the reliability of the country's economy and creates a secure business environment with a low level of risk.
2. Australia regularly ranks high in ratings for quality of life, stability and security. The ability to respond quickly to global change and a diversified economy support its sustainable growth. In the Index of Economic Freedom for 2019, this country ranked fifth in the world. Six Australian cities are among the top 10 cities in the world in terms of quality of life.
3. Australia attracts foreign investors with its open economy and minimal trade restrictions that allow companies to import goods / services from around the world. Such business conditions have stimulated investment growth and given foreign investors the opportunity to use Australia to trade in large markets such as Asia.

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