In the 2026-27 Budget, the Australian Treasurer announced a suite of legislative, policy and practice reforms to Australia’s foreign investment framework, set out in its overview of reforms paper. The announcement follows a discussion paper released on 31 October 2025 where the Government sought stakeholder views on the proposed reforms.
The stated purpose of the proposed reforms is to further streamline and strengthen Australia’s foreign investment framework. The key issues for foreign investors are:
- New processing target for low-risk applications. From 1 January 2027, a 30-day target will apply to process applications that meet Treasury’s “low-risk” criteria.
- Reducing mandatory applications for low-risk investments. Proposed legislative changes would exempt selected lower-risk transactions, amend tracing rules and broaden exemption certificate powers.
- Expand screening of sensitive sectors. Proposed legislative changes would introduce new mandatory notification requirements for foreign investments in sensitive sectors. The sectors and screening criteria remain to be settled.
- Review of existing conditions. Treasury began its review of “ineffective” conditions in existing foreign investment approvals on 1 July 2026, initially focusing on tax conditions.
New processing target for low-risk applications
From 1 January 2027, Treasury will introduce a new target to process “low-risk” applications within 30 days. However, the proposed 30-day period is merely a processing target rather than a strict decision making period.
To qualify as “low-risk”, both the investor and the proposed action must satisfy the following criteria:
| Investor | Proposed Action |
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The 30-day processing target should improve timing certainty for qualifying repeat investors. However, it will not be applicable to first-time investors in Australia, investments in sensitive sectors, or investors with a complex fund structure.
Reducing mandatory applications and reporting obligations for low-risk investments
The proposed legislative reforms aim to reduce application and reporting requirements for lower-risk investments. The principal proposals include:
| Overview of proposed reforms | |
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| Exempt selected transactions |
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| Amend tracing provisions |
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| Broaden exemption certificates |
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| Simplify Register reporting |
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These proposed reforms will be beneficial for repeat investors, and investment funds with foreign government ownership. However, their benefit will depend on the final details of the proposed new legislation and, in the case of exemption certificates, the scope and conditions of the certificate granted.
Closer scrutiny of sensitive investments
The Government proposes to expand mandatory notification requirements for certain foreign investments in current and emerging sensitive sectors. Treasury will consult on the sectors and criteria that will trigger the new notification requirements. Australia’s May 2026 Foreign Investment Policy identifies critical infrastructure, critical minerals and critical technology, as well as investments near sensitive Australian Government facilities or involving sensitive data, as areas that will attract greater scrutiny. We expect that these sectors will be a focus for the new mandatory notification requirements.
Other proposed reforms would:
- expand the definition of “associate” to capture additional relationships capable of exercising influence (including debt arrangements that allow the exercise of influence);
- allow the Treasurer, in limited circumstances, to “call-in” commercial arrangements that do not result in a change of ownership, such as offtake or lending arrangements, but that could be used to exert foreign control and pose national security risks; and
- strengthen the Treasurer’s ability to impose tailored conditions, accept statutory undertakings and respond to non-compliance or avoidance.
For transaction planning, this means that notification may be triggered even if the foreign investor does not acquire a specified ownership percentage in the Australian target entity or business. Foreign investors should also consider the influence they acquire on the Australian target entity or business by financing, offtake and other commercial rights. The proposed boundaries of those powers will be important to review in the draft legislation.
Review of ineffective conditions
Treasury commenced its review of existing approval conditions on 1 July 2026, initially focusing on tax conditions. Its 19 August 2026 consultation paper sought submissions on conditions that may be ineffective, duplicative or outdated.
Submissions in response to Treasury’s consultation paper by various stakeholders identify several recurring concerns about conditions on existing approvals and we have summarised these below:
| Issue identified in submissions | Suggested reforms by stakeholders |
|---|---|
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Overlapping conditions. Successive approvals can impose similar and overlapping conditions on the same corporate group, with different reporting dates and separate audits. |
Allow conditions and reporting to be aligned or consolidated across approvals, without requiring a separate fee-bearing variation application for each approval. |
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Duplicative tax reporting. Some conditions require advance notification of a transaction and subsequent annual reporting, or information already supplied to Treasury or the ATO. |
Simplify standard tax conditions, remove duplicative reporting and make greater use of information already held by Treasury or the ATO. |
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Conditions that outlast their purpose. Reporting may continue under expired exemption certificates or after the risk addressed by a condition has been eliminated. |
Provide clearer expiry or review mechanisms so that conditions do not continue unnecessarily. |
Treasury will communicate the outcomes of the review of ineffective conditions, including any prospects of updating, removing or otherwise amending conditions, to investors affected by those conditions. The review is expected to conclude by mid-2027. In the meantime, investors must continue to comply with conditions attached to their existing FIRB approvals.
How Addisons can help
Addisons advises its Australian and international clients on Australia’s foreign investment framework, including FIRB approval requirements, applications and compliance with approval conditions.
To discuss how the proposed reforms may affect a transaction or existing approval, please contact Angelika Yates, Arthur Davis or Alex Adams.
Visit this link to download our current foreign investment framework guide and stay up to date on amendments.