Foreign investors in Australian property are under notice to follow the rules, after a hefty fine was issued this week.
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 investor was penalised for purchasing multiple properties in outer Melbourne without receiving permission from the Foreign Investment Review Board (FIRB).
The Australian Taxation Office (ATO) identified the purchases 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 Foreign Acquisitions and Takeover Act 1975 (FATA) by Mr Vijay Balasubramaniyan, who purchased four properties without permission and simultaneously owned two established properties at once, in contravention of the FATA.
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 properties were sold as a result of ATO compliance action, making these houses available to Australian residents.
