Last Tuesday (December 1), the Australian government tightened their foreign property investment rules. Those who breach such laws now face tougher penalties. Likewise, the Australian Taxation Office dispatched a team of 50 compliance officers to investigate potential offenders.
Individuals who are caught breaking Australia's foreign property investment rules have to pay $135,000 or spend three years in prison, or both. Previously, the maximum penalty for offenders was only $90,000. Meanwhile, companies illegally acquiring properties have to pay fines of up to $675,000.
"New civil penalties supporting divestment orders and ensuring people who break the rules do not profit from their actions also come into effect," Treasurer Scott Morrison explained. "These include forfeiting any capital gains made on divestment of a property and fines for third parties who knowingly assist foreign investors to break the rules."
In recent years, the Australian real estate market suffered with inflation. Real estate prices, specifically in Sydney and Melbourne, shot up due to the influx of rich foreign investors especially those from China.
According to Morrison, foreign investors are welcome in Australia as long as they do not go against "national interest." Generally, non-Australian residents are allowed to own real estate properties in the country but they are only limited to purchasing new dwellings instead of existing residential properties. Many cashed-up foreign buyers disregarded this law.
To address the issue, the government gave foreign investors who illegally acquired real estate property an amnesty of seven months to voluntarily come forward and disclose illegal ownership. Those who submit to the government would be given a period of one year to sell their property and be spared from criminal prosecution.
Temporary residents such as international students who do not seek approval before buying an established property in Australia are also to face the same penalties. In general, temporary residents are allowed to own an established property to serve as their place of dwelling while temporarily living in Australia. However, the government's approval is needed.
