As part of the Albanese Labor Government delivering on its election commitment, the Australian Treasurer announced changes to the Foreign Investment Review Board (FIRB) application fee structure, which will double the fees payable for FIRB approvals.
When are the fees doubling?
The new fees will come into effect on 29 July 2022. This means that from 29 July 2022 onwards, foreign residents purchasing residential real estate valued at less than $1 million will pay $13,200 per FIRB application, previously $6,350.
While another fee doubling announcement is not anticipated, the fees will continue to be indexed annually.
What does this mean for applications lodged prior to 29 July 2022?
The Amendment Regulation has no effect on an application in retrospect. This means that where an application was lodged before 29 July 2022, the fee payable will be the fee specified in the pre-29 July 2022 fee schedule.
What are the new fees?
In summary, the current FIRB fees are outlined generally as follows:
|Interest acquired in|
|Interest acquired in|
|Interest acquired in an|
Australian entity, business,
commercial land or mining tenement
|For single transactions|
|Less than $75,000||Less than $75,000||Less than $75,000||$4000|
|$1mil or less||$2mil or less||$50mil or less||$13,200|
|$2mil or less||$4mil or less||$100mil or less||$26,400|
|$3mil or less||$6mil or less||$150mil or less||$52,800|
|$4mil or less||$8mil or less||$200mil or less||$79,200|
|$5mil or less||$10mil or less||$250mil or less||$105,600|
|$10mil or less||$20mil or less||$500mil or less||$237,600|
|$15mil or less||$30mil or less||$750mil or less||$369,600|
|$20mil or less||$40mil or less||$1bil or less||$501,600|
|Over $40mil||Over $80mil||Over $2bil||$1,045,000|
|Variations of approval or exemption certificate (immaterial/minor variations)||$4,000|
|Variations of approval or exemption certificate (material variation)||$26,400|
What does this mean for foreign residents?
The doubling of FIRB application fees means foreign residents are looking at an increased upfront cost when investing in the Australian market, which may deter foreign investment ever so slightly.
Perhaps when considering purchases in real estate, foreign residents may consider house and land packages. While there may be no impact on the already onerous FIRB application fee, it may reduce stamp duty.
For example, John, a foreign resident, purchased vacant land in Mernda for the value of $300,000 from the Vendor/Developer. John also enters a building contract for the value of $350,000 to construct a dwelling on the vacant land. Stamp duty is calculated based on $300,000, being the value of the land only, not the combined value of land and build contract.
What does this mean for contracts entered into before 29 July 2022 but a FIRB application submitted after 29 July 2022?
The FIRB application would likely attract the post 29 July 2022 fee. However, a refund application should follow to seek reimbursement of the differential amount on the basis that the contract was entered into before 29 July 2022. While there is no guarantee of success of this refund application, there certainly is no loss with its submission.