Judgement Day arrives for illegal foreign buyers
by Leith van Onselen
Today is 1 December, which means that the amnesty on illegal foreign buyers of Australian residential real estate is over and the Government’s new penalty regime comes into effect.
From today, a foreign national that has been found to have purchased an established dwelling without prior Foreign Investment Review Board (FIRB) approval, or has failed to dispose of a property once they have left Australia (in the case of temporary residents), faces increased penalties, including:
Criminal penalty of $135,000 or 3 years imprisonment; or
Civil penalty of the capital gain made on divestment of the property or 25% of the purchase price or market value of the property (whichever is greater).
For the first time, third parties that knowingly assist foreigners to illegally purchase Australian homes will also face penalties of $45,000 individually or $225,000 for a company.
The new penalty regime is outlined in the below tables:
To help enforce the new rules, enforcement responsibilities were shifted from FIRB to the Australian Taxation Office (ATO) in May. The ATO has also been manned with 50 enforcement officers, and has sophisticated systems and detailed data matching capabilities at its disposal.
Already, the ATO is actively pursuing illegal foreign buyers. According to Treasurer Scott Morrison last month, “over 1,044 matters have been investigated [by the ATO]. Through information provided by the public, together with our own enquiries, we now have 532 cases under active investigation”.
Now that the amnesty is over, illegal foreign buyers and their accomplices have nowhere to hide. Bring on the penalties and divestment orders.