Register of Foreign Ownership of Australian Assets: notification obligations

Under Part 7A of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), the Foreign Ownership Register replaced the following registers previously administered by the Australian Taxation Office (ATO): 

• the register of foreign ownership of agricultural land (Agricultural Land Register) maintained under the Register of Foreign Ownership of Water or Agricultural Land Act 2015 (Cth) (Old Register Act);
• the register of foreign ownership of water entitlements (Water Register) maintained under the Old Register Act; and
• the register of foreign ownership of residential land.¹

However, the Foreign Ownership Register did not replace the register of critical infrastructure assets or the register of foreign owners of media assets. Those registers are still separately maintained by the Cyber and Infrastructure Security Centre and the Australian Communications and Media Authority respectively.

Part 7A of the FATA significantly broadened the notice requirements in respect of foreign-owned Australian assets. Most notably, certain acquisitions of interests in Australian entities or businesses, and acquisitions of any kind of Australian land, must be notified under the Foreign Ownership Register. Accordingly, foreign investors must comply with additional reporting and compliance obligations when investing in Australia compared with the previous system of registration.

When must notice be given under the Foreign Ownership Register?

The obligation to notify under the Foreign Ownership Register applies in the following circumstances.

1. Notice must be given when a foreign person acquires one of the following types of interests in an Australian asset (Registrable Interest) on or after 1 July 2023:

Notice of the acquisition of a Registrable Interest must be given within 30 days of the acquisition taking place, other than the acquisition of a registrable water interest, in which case notice must be given within 30 days after the end of the financial year in which the acquisition took place.

2. Notice must be given where a person who holds a Registrable Interest (even if acquired before 1 July 2023) and who was not a foreign person at the time of acquiring the interest becomes a foreign person.

3. Notice must be given when one of the following changes in a “registered circumstance” takes place in relation to a Registrable Interest recorded on the Foreign Ownership Register:

• the foreign person disposes of the Registrable Interest;
• the foreign person ceases to be a foreign person, or a foreign person who is a foreign government investor ceases to be a foreign government investor;
• where the foreign person has a Registrable Interest in a specific type of land (eg residential land) the nature of that interest changes (eg the land becomes commercial land);
• where the foreign person has a Registrable Interest in a business or entity and their interest in the business or entity changes by 5% or more; and
• where a foreign person has registered a registrable water interest and the volume of water, or share of a water resource, changes, and the person still holds the registrable water interest at the end of the financial year in which the change took place.

Notice of the change in a “registered circumstance” must be given within 30 days of the change taking place, other than in respect of a change to a registrable water interest, in which case notice must be given within 30 days of the end of the financial year in which the change took place.

Other key takeaways

Below are other key takeaways in relation to the Foreign Ownership Register:

• The reporting obligations are not retrospective and generally only apply to events that take place on or after 1 July 2023. However, notification obligations exist in relation to Registrable Interests that were acquired before 1 July 2023 in the following circumstances:
  
  • where any ‘live’ registrations on the former Agricultural Land Register and former Water Register were ‘carried over’ to the Foreign Ownership Register on 1 July 2023, there is an obligation to give notice of a change in a “registered circumstance” in respect of a carried over registration; and
  • where a (non-foreign) person acquired an asset before 1 July 2023 and becomes a foreign person on or after 1 July 2023, there is an obligation to notify.
• Notice under the Foreign Ownership Register must be given by foreign persons (or their representatives) using the ATO’s online platform maintained under the Foreign Acquisitions and Takeovers (Register Notices) Data Standard 2023 (Cth).
• Consistent with the Agricultural Land Register and Water Register previously maintained by the ATO, no fee is payable when giving notice under the Foreign Ownership Register.
• If a person fails to provide notice within the relevant timeframe, they may incur a maximum civil penalty of 250 penalty units.²
• Care should be taken if a foreign person dies or is wound up before giving a notice required under the Foreign Ownership Register. In the case of a natural person, the executor or administrator of the person’s estate must give the required notice. In the case of a corporation, the liquidator must give the required notice.
• Some acquisitions are exempt from the requirement to give notice under the Foreign Ownership Register. Generally, these are acquisitions that are wholly exempt from the FATA, such as acquisitions by moneylenders, acquisitions from Australian government bodies and acquisitions of land by Australian citizens who do not ordinarily reside in Australia.

For regular insights follow Addisons on LinkedIn and subscribe to our updates.