Starting 1 January 2023, penalties for breaching Foreign Investment Review Board (FIRB) regulations related to foreign acquisitions of residential land will be doubled, per the Foreign Acquisitions and Takeovers Act 1975 (Cth).
This measure, further to the 2022 changes, has been introduced as part of the Labor Government’s 2022 election commitment to address housing affordability.
A joint media release by the Treasurer and Julie Collins MP on 31 December 2022, estimated that doubling foreign investment fees and penalties would increase Budget revenue by $2.3 million over the next four years.
The increased penalties are intended to promote compliance with the regulations and stronger enforcement for foreign investors.
The increased penalties are outlined in the table below:
| Relevant section | Maximum penalty prior to change
(greatest of either) |
Maximum penalty post-change
(greatest of either) |
| Section 88:
Failing to advertise new dwellings |
15,000 penalty units (or 150,000 penalty units if the developer is a corporation), or both. | 30,000 penalty units (or 300,000 penalty units if the developer is a corporation), or both. |
| Section 94:
Acquisition of interests in residential land |
(a) the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 25% of the consideration for the residential land acquisition; (c) 25% of the market value of the interest in the relevant residential land. |
(a) double the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 50% of the consideration for the residential land acquisition; (c) 50% of the market value of the interest in the relevant residential land. |
| Section 95:
Acquisition of interests in established dwellings |
(a) the amount of the capital gain that was made or would be made on the disposal of the interest;
(b) 25% of the consideration for the acquisition of that interest; (c) 25% of the market value of that interest. |
(a) double the amount of the capital gain that was made or would be made on the disposal of the interest mentioned;
(b) 50% of the consideration for the acquisition of that interest; (c) 50% of the market value of that interest. |
| Section 95(A):
Taking action while prohibited by this Act |
(a) the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 25% of the consideration for the residential land acquisition; (c) 25% of the market value of the interest in the relevant residential land. |
(a) double the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 50% of the consideration for the residential land acquisition; (c) 50% of the market value of the interest in the relevant residential land. |
| Section 96:
Contravening conditions in relation to residential land |
(a) the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 25% of the consideration for the acquisition of that interest; (c) 25% of the market value of that interest. |
(a) double the amount of the capital gain that was made or would be made on the disposal of the interest in the relevant residential land;
(b) 50% of the consideration for the acquisition of that interest; (c) 50% of the market value of that interest. |
| Section 97: Persons contravening conditions | 250 penalty units. | 500 penalty units. |
It is important to note that penalties may also apply to people associated with a breach of the provisions in certain circumstances.
Please do not hesitate to contact Thomas Zilm, Partner, or Esther Ihn, Senior Associate, from our Property Division if you have any queries in relation to this article.