FIRB WHAT? WHAT IS FOREIGN INVESTMENT REVIEW BOARD APPROVAL?
Foreign Investment Review Board (FIRB) approval is required where a temporary resident or foreign investor wishes to invest or buy residential land in Australia. Penalties apply for foreign acquirers who fail to comply.
Who has to apply?
For the purposes of FIRB approval, a Buyer of residential land in Queensland may be a foreign acquirer if they fall into one of the following categories:
- A person who is not a permanent resident of Australia or an Australian citizen
- A corporation where one or more of the following holds a substantial interest in the corporation:
- An individual not ordinarily resident in Australia
- A foreign corporation; or
- A foreign government.
- A trust where a trustee of the trust is a foreign entity.
You are eligible for an exemption* from FIRB approval if you are:
- An Australian citizen
- A New Zealand citizen
- An Australian permanent resident; or
- A foreign person acquiring property as joint tenants with their Australian citizen spouse, New Zealand citizen spouse or Australian permanent resident spouse.
What can temporary residents buy?
If you are a temporary resident, you need to apply for FIRB approval and can only purchase one established house for you to live in it. If you cease to live there, you must sell it.
If you wish to buy an investment property, it must be a brand-new property or vacant land to build a brand-new property.
What can a foreign investor buy?
If you are a foreign investor, you will need to apply for FIRB approval and can only purchase a new property or vacant land to build a brand-new property. Generally, you cannot buy an existing dwelling unless one of the following exceptions apply:
- The property developer has obtained an exemption certificate
- It is a property you have inherited
- The property was part of a family court settlement; or
- You were awarded the property by way of court order.
What does it mean for your Contract?
If you do not have FIRB approval, we recommend that you include the following special condition making the Contract subject to the Buyer obtaining FIRB approval:
- This Contract is subject to and conditional upon the Buyer obtaining Foreign Investment Review Board (hereinafter called ‘FIRB’) approval for the transaction.
- The Buyer shall forthwith apply to the FIRB for approval and use their best endeavours to obtain such approval.
- In the event that such approval is not granted before xxxx then this Contract shall be at an end and all monies paid by the Buyer shall be refunded in full.
- The Buyer agrees that immediately upon this becoming aware of the result of this application to the FIRB they shall advise the Seller of such result.
- The Seller may terminate this Contract by notice in writing to the Buyer if the Buyer fails to either waive the benefit of this special condition or fails to advise the Seller by 5pm on the due date that the Buyer has received FIRB approval to acquire the Property whereupon this Contract shall be at an end and any deposit paid by the Buyer shall be refunded in full.
How to apply for FIRB approval?
We do not apply for FIRB approval and most of our clients do this themselves online via the following link:
How much does FIRB approval cost?
Fees start at $6,350.00 for acquisitions of $1m or less, and increase every $1m of consideration up until a maximum of $503,000.00 for acquisitions of more than $80m.
Additional Foreign Acquirer Duty
In addition to FIRB approval, temporary residents and foreign investors will also be subject to Additional Foreign Acquirer Duty (AFAD). This is an extra amount of duty that applies to transactions that are liable for transfer duty (currently calculated at 7% of the dutiable value of the property). AFAD applies when all of the following conditions are met:
- You are an acquirer for the purposes of the transaction and a foreign person
- Your transaction involved AFAD residential land; and
- Your liability for your transaction arises on or after 1 October 2016.
If you need any assistance in determining whether you are subject to the AFAD rules, please do not hesitate to contact us.