Foreign Investment Review Board - What you need to know
Coleman Greig has noticed an increasing number of clients who are surprised to discover the extent to which they are required to liaise with the Foreign Investment Review Board (FIRB) as part of leasing transactions. Whilst some people tend to believe that a foreign person leasing a property for the purposes of commercial or industrial business will not require FIRB approval - this is not the case in circumstances where the land being leased is vacant/not yet developed.
It is exceedingly important that you, as a lessee, have the correct information relating to what you need to do, and how to navigate your particular circumstance. Coleman Greig's Commercial Property Law team can help if you are at all confused about your responsibilities as a foreign person leasing property within Australia - so please don't hesitate to get in touch with us if you do have any queries.
The starting point to see whether you are required to notify the FIRB, or to obtain approval from the FIRB - is to confirm whether you are a foreign person as defined under the regime. Regardless of the terminology used, a 'foreign person' can actually be an individual, a company or even a foreign government. The threshold as to whether a company can be defined as a 'foreign person' for the purposes of the FIRB regime is quite low - so it is incredibly important for you to take a thorough look through your shareholdings.
Assuming that you are a 'foreign person', you will need to take an equally close look at whether your particular transaction requires you to either notify, or submit an application to the FIRB. Some common leasing transactions for which you will be required to notify or apply to the FIRB include:
- Leases of existing buildings where rent reaches a certain threshold.
- Leases of vacant land - this can include cases where parties are entering into a lease agreement for the construction of the premises on a vacant block of land, and where the lease commences following the completion of the building work.
- Leases where the foreign person is a foreign government- this may include situations where a company is owned by another entity that has some form of government ownership.
It is also important that you are aware that there are application fees that must be paid before your application can be progressed - and that the amount of the fee will be dependent upon the amount of rent, or the basis upon which the application or notification is being made.
You will be required to complete your application online through an FIRB portal. Following this step, your application will be processed through the Australian Taxation Office. It is exceedingly important to note that if you do not notify the FIRB of, or apply to the FIRB with regard to your transaction in circumstances where you are required to do so - you will face fines and civil penalties.
If you have any questions surrounding your responsibilities with regard to the Foreign Investment Review Board, or you have a query relating to the definition of a 'Foreign Person' - and how this may impact your potential investment, please don't hesitate to get in touch with Coleman Greig's Commercial Property team. With over 22 years of experience acting in leasing transactions, Andrew Grima - Principal in the Commercial Property team will be more than happy to guide you through your FIRB leasing transaction.