Foreign purchasers & FRIB approval
Australia is home to multinationals, and many people are willing to buy a property in Australia regardless of their nationality.
However, if any purchaser (individual, state, or organisation) is identified as a foreign resident, under Australia’s foreign resident framework, in that case, they must apply for foreign investment approval before purchasing real estate within Australia. Alternatively, you can buy a property subject to the Foreign Resident Investment Review Board (FRIB) approval.
A purchaser who lives/works in Australia, without obtaining a Permanent Residency/citizenship, is defined as a foreign resident under the relevant legislation. Foreign entities which are owned by foreign residents/states, or corporations, are defined as foreign purchasers.
Furthermore, foreign purchasers must obtain a FRIB approval/exemption before signing the Contract to purchase a property in Australia, or that Contract of Sale must be subject to the FRIB approval. However, if anyone signs an off-the-plan contract, they must obtain the FRIB approval before signing the said contract. Because of that, an off-the-plan purchase is an unconditional contract to purchase a residential property.
Therefore, foreign purchasers must apply for FRIB approval/ exemption and wait to receive that approval before taking an interest in residential real estate. If not, it may cause a breach of law, and strict penalties may apply for Australia’s foreign investment rules. that includes civil and criminal penalties and disposal orders.
The Australian Tax Office (ATO) states that ” Cases of non-compliance with Australia’s foreign investment framework may also be brought to the attention of law enforcement agencies and other Commonwealth departments such as the Department of Immigration and Border Protection”.
FRIB approval/ exemption must be applied for through ATO, and it needs to provide your personal, financial, and property (intended to buy) details. The application fee is based on the property value and is payable when you apply. The amount will update at each financial year. Generally, it takes 30 days to process the application, and if you receive the approval /exemption, it is valid for only 12 months. ATO may issue an approval, subject to the conditions, or not. ATO may grant approve/an exemption, if you are eligible under the relevant legislation and your personal circumstances. Some strict conditions/restrictions/compliances may be applicable even if you obtain the FRIB approval or exemption.
We recommend that you instruct your lawyer /conveyancer about your citizenship or visa status accurately and follow the rules and guidelines before acquiring an Australian property as a foreign resident purchaser. It is a wise idea to obtain professional advice before investing in Australian property as a foreign purchaser, and consider the legal, tax, and fiancé consequences of your decision.
