Registration of foreign ownership of agricultural land

Many existing owners of agricultural land will need to register with the Australian Taxation Office (ATO) by 31 December 2015.

Details of the new requirements and how Thynne + Macartney can assist with registration are set out below.

Summary of the changes

The changes include:

• From 1 March 2015, the screening threshold for Foreign Investment Review Board (FIRB) approval for a proposed acquisition of rural land by privately-owned foreign investors was reduced from $252 million to $15 million (with some exceptions). This new threshold applies to the cumulative value of agricultural land owned by the investor, including the proposed purchase.
• From 1 December 2015, a new $55 million threshold (again, with some exceptions) for foreign investment in agribusiness will be introduced.
• From 1 December 2015, significant new fees will apply for FIRB review applications including:
  • for rural land less than $1 million: a $5,000 fee;
  • for rural land equal to or more than $1 million: a $10,000 base fee then $10,000 incremental fee per additional $1 million in rural land value, capped at $100,000; and
  • for agribusinesses: a $25,000 fee (or $100,000 for agribusiness acquisitions where the value of the transaction is greater than $1 billion).

Register of Foreign Ownership of Agricultural Land

All foreign investors who hold interests in agricultural land must now register those interests with the ATO regardless of the value of that land.

Importantly:

• a existing foreign interest in agricultural land (held on or after 1 July 2015) must be registered with the ATO by 31 December 2015;
•  a new interest must be registered within 30 days of acquisition; and
• foreign investors must also notify the ATO if they cease owning agricultural land.

The ATO will collect information such as the location and size of the property and interest acquired.  The data gathered will be used to develop the Agricultural Land Register, which is expected to be publically available from 2016.]

Do you need to register on the Agricultural Land Register?

“Foreign persons” with certain interests in “agricultural land” held on or after 1 July 2015 must report those interests to the ATO.

A foreign person is currently defined as:

• a individual not ordinarily resident in Australia;
• a corporation in which an individual not ordinarily resident in Australia or a foreign corporation holds an interest (alone or together with one of more associates) of at least 15% in the corporation;
• a corporation in which two or more persons (each of whom is an individual not ordinarily resident in Australia) or a foreign corporation hold an aggregate interest of at least 40% in the entity;
• the trustee of a trust in which an individual not ordinarily resident in Australia or a foreign corporation holds (alone or together with one of more associates) a beneficial interest in at least 15% of the income or capital of the trust; or
• the trustee of a trust in which two or more persons (each of whom is an individual not ordinarily resident in Australia) or a foreign corporation hold beneficial interests in at least 40% of the income or capital of the trust.

The term “associate” is very broadly defined.

Agricultural land is land in Australia that is used, or that could reasonably be used for a primary production business and includes freehold and leasehold land (where the term is likely to exceed five years).

What to do next

If you would like any further information on the Register of Foreign Ownership of Agricultural Land please contact your adviser at Thynne + Macartney.