The Commonwealth Government has announced its decision on foreign investment changes following consultation on its Options Paper.

Fees will be levied on all foreign investment applications. For residential properties valued at $1 million or less, foreign investors will pay a fee of $5,000. Higher fees will apply to more expensive residential properties as well as business, agriculture and commercial real estate applications.

For foreign investment in agriculture, from 1 December 2015, a $55 million threshold (based on the value of the investment) for investments in agribusiness will be introduced. From 1 March 2015, the screening threshold for agricultural land was lowered from $252 million to $15 million (cumulative).

Enforcement of the existing foreign investment rules relating to residential real estate will be transferred to the Australian Taxation Office (between now and 1 December 2015).

Higher penalties will apply if foreign investors breach the rules:

• The existing criminal penalties will be increased from $85,000 to $127,500 for individuals and divestment orders will be supplemented by civil pecuniary penalties and infringement notices for less serious breaches of the residential real estate rules.
• Third parties who knowingly assist a foreign investor to breach the rules will also now be subject to civil and criminal penalties.

The Government will introduce legislation into Parliament to implement commencement of the reforms on 1 December 2015.