Changes to reporting foreign investments –Register of Foreign Ownership of Australian Assets

15 minute read 06.06.2023 Alberto Colla, Thomas Galloway

With a new Register of Foreign Ownership of Australian Assets set to commence on 1 July 2023, foreign investors should take note of the new requirements.

Key takeouts

The new Register of Foreign Ownership of Australian Assets is set to commence on 1 July 2023. The Register will be maintained by the ATO and will consolidate and streamline several existing registers.

Importantly though, it's not just a simple amalgamation of existing registers. The new Register will capture a broader range of interests acquired by foreign investors than before, particularly in relation to commercial land. Foreign investors should review and update their internal procedures to ensure adequate monitoring of and ongoing compliance with the new requirements.

From 17 June 2023, the ATO will introduce new online services for foreign investors. Foreign investors and their representatives will need to get a myGovID to use the service.

On 1 July 2023, the new Register of Foreign Ownership of Australian Assets (Register) will commence. Foreign investors will be required to report certain investments in Australian assets and other related matters to the ATO, to enable it to maintain the Register.

The legislative framework for the Register was introduced in 2020 under Part 7A of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), with supplementary regulations being made on 26 June 2023. The Commissioner of Taxation will administer the Register.

The Register will consolidate and replace several existing registers currently maintained by the ATO, being:

the Register of Foreign Ownership of Agricultural Land;
the Register of Foreign Ownership of Water Entitlements; and
the ATO’s register of foreign-held interests in residential land.

Other government registers that cover foreign ownership of certain assets, namely the Register of Foreign Owners of Media Assets and the Register of Critical Infrastructure Assets, are not affected by these reforms and are not being amalgamated into the new Register.

The purpose of the Register is to give the Australian government greater visibility of foreign ownership of Australian assets. Information on the Register will not be publicly available, however the Commissioner of Taxation (as Registrar) is required to provide a report to the Treasurer each financial year, for presentation to Parliament, including statistics derived from information on the Register.

The Register will capture a broader range of interests acquired by foreign investors than before, particularly in relation to commercial land. The specifics of what must be registered are addressed in the tables below. Foreign investors should note that the Register covers both the acquisition and divestment of certain interests, changes in the levels of interest held in assets and changes in investors’ circumstances (for example, an investor ceasing to be a foreign person). Therefore, ongoing monitoring by foreign investors of their registrable actions and circumstances will be crucial to ensure compliance.

Foreign investors’ obligations to report transactions after they have occurred for inclusion on the Register are separate and distinct from their obligations to seek approval from the Treasurer before undertaking transactions. Some transactions that do not require pre-approval from the Treasurer must nevertheless be notified to the ATO once they have completed.

What needs to be registered?

Division 3 of Part 7A of the FATA outlines when a foreign investor is required to notify a transaction or a relevant change in circumstance to the ATO. The Treasury has recently registered the amending regulations to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (FATR) (register amendment regulations), which seek to include additional notification requirements for actions in relation to Australian media businesses, actions taken by foreign government investors, and actions covered by exemption certificates.

Notification is made by giving a ‘register notice’ (discussed further below). Notification is typically required within 30 days of the date of the action or circumstance event being notified (the ‘registrable event day’).

The below tables summarises the actions that must be notified to the ATO:

Register notice required whenever…

Land Navigation Show below Hide below

Land and mining
a foreign person acquires an interest (other than an equitable interest) in Australian land, including an Australian land entity FATA 130ZA(1)(a), FATR 58J	Time to notify: within 30 days of the interest being acquired The requirement covers acquisitions of interests in land that may not have required prior approval from the Treasurer (e.g., interests in developed commercial land by private foreign investors under the applicable monetary threshold). The requirement captures most kinds of interests in land, including: • freehold interests; • legal interests in commercial or residential land pursuant to a lease or license with a term likely to exceed five years; • an interest in a mining or production tenement; • an interest in the securities of an entity that owns Australian land, that entitles the holder to occupy a residential dwelling; • an interest in the share in an Australian land corporation (or land trust) or agricultural land corporation (or agricultural land trust); and • an interest in the share of a corporation that is the trustee of an Australian land trust or agricultural land trust.
a foreign person acquires an equitable interest in agricultural land pursuant to a lease or licence with a term likely to exceed five years FATA 130ZA(1)(b)	Time to notify: within 30 days of the interest being acquired This requirement would cover the acquisition of equitable interests in pastoral leases.
a foreign person acquires an interest (other than an equitable interest) in an exploration tenement FATA 130ZB	Time to notify: within 30 days of the interest being acquired Private foreign investors (i.e., non-foreign government investors) may be required to notify the ATO even though they typically do not require prior approval from the Treasurer to acquire a legal interest in an exploration tenement. Note however section 27B of the FATR, which states that the FATA does not apply in relation to interests in exploration tenements if the entity that holds or acquires the interest is a foreign person who is not a foreign government investor and the exploration tenement is not in respect of Australian land that is national security land. The implication is that private foreign investors (non-foreign government investors) may only be required to provide a register notice under FATA 130ZB in limited circumstances, namely, when they acquire an interest in an exploration tenement that concerns national security land.
a person becomes a foreign person while holding: • an interest (other than an equitable interest) in Australian land; • an equitable interest in agricultural land pursuant to a lease or licence with a term likely to exceed five years; or • an interest (other than an equitable interest) in an exploration tenement. FATA 130ZC	Time to notify: within 30 days of the day on which the person becomes a foreign person The foreign acquirer and Australian target may have separate obligations to notify the ATO for Register purposes. A foreign person that acquires an Australian target may require approval from the Treasurer, and will also have an obligation to notify the ATO for Register purposes of the acquisition. The Australian target, which becomes a foreign person under section 4 of the FATA following the acquisition, has a separate obligation to give a register notice under this section. This requirement will not apply to an interest a person holds when becoming a foreign person if the person would not have been required to give a Register notice if they acquired that interest while being a foreign person.
there is a change in the nature of the interest in Australian land held by a foreign person FATA 130ZD	Time to notify: within 30 days of the first day the person is aware, or ought reasonably to have become aware, of the change This requirement covers situations where land held by a foreign person changes from one type of land to another (e.g., agricultural land becomes commercial land).

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Water interests
a foreign person acquires a ‘registrable water interest’ during a financial year and holds the interest at the end of the last day of the financial year FATA 130ZE	Time to notify: within 30 days of the end of the financial year This obligation will replace foreign investors’ obligations under the Register of Foreign Ownership of Water or Agricultural Land Act 2015 (Cth).
a person becomes a foreign person while holding a registrable water interest FATA 130ZF	Time to notify: within 30 days of the last day of the financial year in which the person becomes a foreign person
there is a change in certain characteristics of a registrable water interest held by a foreign person FATA 130ZG	Time to notify: within 30 days of the last day of the financial year This requirement applies where the volume of water or share of a water resource referred to in the registrable water interest changes.

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Entities or businesses
a foreign person takes a ‘significant action’ under section 40 of the FATA (entities – i.e., share acquisitions or acquisitions of units in unit trusts, or taking certain actions in relation to an entity) FATA 130ZH	Time to notify: within 30 days of the registrable event day (date of action, ‘change in control’) Significant actions that are not ‘notifiable actions’ or ‘notifiable national security actions’ do not require pre-approval by the Treasurer. Where a foreign investor takes such a significant action without seeking voluntary approval, there is no requirement to notify the ATO for Register purposes (unless the action is subsequently called in for review).
a foreign person takes a significant action under section 41 of the FATA (businesses, i.e., asset acquisitions, or entering / terminating a significant agreement with a business) FATA 130ZI	Time to notify: within 30 days of the registrable event day (date of action, ‘change in control’)
a foreign person takes a notifiable action under section 47 of the FATA (entities and businesses) FATA 130ZJ	Time to notify: within 30 days of the action being taken This requirement does not cover notifiable actions to acquire interests in Australian land (this is covered already under section 130ZA).
a foreign person’s interest in an entity or business differs by more than 5% from what was previously notified to the ATO FATA 130ZN	Time to notify: within 30 days of the first day the person is aware, or ought reasonably to have become aware, of the difference Equitable interests are disregarded for the purposes of the 5% analysis.
a person becomes a foreign person while holding an interest in an entity or business FATA 130ZO	Time to notify: within 30 days of the day on which the person becomes a foreign person This requirement applies only where, had the person been a foreign person on the day the interest in the entity or business was acquired, the acquisition would have been a notifiable action under section 47 of the FATA.

National security Navigation Show below Hide below

National security
a foreign person takes a notifiable national security action under section 55B of the FATA FATA 130ZK	Time to notify: within 30 days of the action being taken This requirement does not cover acquiring an interest in national security land (such actions will be covered under section 130ZA).
a foreign person takes a ‘reviewable national security action’ under section 55D of the FATA (entities) FATA 130ZL	Time to notify: within 30 days of the registrable event day (date of action or receipt of no objection notification) Reviewable national security actions are not required to be approved by the Treasurer before being taken. Where a foreign investor takes a reviewable national security action without seeking voluntary approval, there is no requirement to notify the ATO for Register purposes (unless the action is subsequently called in for review).
a foreign person takes a reviewable national security action under section 55E of the FATA (businesses) FATA 130ZM	Time to notify: within 30 days of the registrable event day (date of action or receipt of no objection notification) See above.
a person becomes a foreign person while carrying on or holding an interest in a national security business FATA 130ZP	Time to notify: within 30 days of the day on which the person becomes a foreign person Refer to section 8AA of the FATR for the definition of ‘national security business’.

Australian media business Navigation Show below Hide below

Australian media business
a foreign person acquires a direct interest in an entity or business that wholly or partly carries on an Australian media business FATR 58B	Time to notify: within 30 days of the registrable event day (date depends on circumstances) Refer to section 13A of the FATR for the definition of ‘Australian media business’.

Foreign government investors Navigation Show below Hide below

Foreign government investors

a foreign government investor, and takes an action under subsection 56(1) of the FATR

FATR 58B

Time to notify: within 30 days of the registrable event day (date depends on circumstances)

Section 56(1) of the FATR covers foreign government investors:
• acquiring a direct interest in an Australian entity or Australian business;
• starting an Australian business;
• acquiring a legal or equitable interest in a tenement; and
• acquiring an interest of at least 10% in the securities of a mining, production or exploration entity.

Exemption certificates Navigation Show below Hide below

Exemption certificates
a foreign person takes an action covered by an exemption certificate FATR 58C-58G	Time to notify: generally, within 30 days of taking the action The register amendment regulations generally treat actions covered by exemption certificates as if they were subject to the other relevant Register requirements in the FATA.

Other changes in circumstances Navigation Show below Hide below

Other changes in circumstances
a ‘registered circumstance’ ceases (a ‘registered circumstance’ exists once a person gives a register notice to the ATO) FATA 130ZQ	Time to notify: generally, within 30 days of the day on which the foreign person is aware, or ought reasonably to have become aware, that the registered circumstance had ceased This requirement applies when a foreign person has given a register notice pursuant to any of the above requirements, and the relevant circumstances cease (e.g., the foreign person divests its interest in an asset).
a foreign person ceases to be a foreign person while registered circumstances exist FATA 130ZR	Time to notify: within 30 days of the day on which the person ceases to be a foreign person This requirement applies when a foreign person has given a register notice pursuant to any of the above requirements, and they cease to be a foreign person after having given such a notice.

The executors and administrators of deceased persons’ estates must give a register notice to the ATO where the person dies before giving a register notice as required under the FATA. Similarly, corporate liquidators must give register notices where a corporation is wound up before giving a register notice that was required.

How to register?

As noted above, notification is made by giving a register notice. The ATO as Registrar is empowered to determine the manner and form of register notices, information and documents that must be supplied with the register notice, how information held by the Registrar is to be stored, and other matters. It is expected that multiple notifications will be able to be covered by a single register notice. There is no fee for giving a register notice.

In February this year the ATO circulated a draft data standard setting out the information likely to be required in a register notice. Although yet to be finalised, the information required is expected to include:

General information

details of the foreign investor submitting the register notice (or the foreign investor on whose behalf a register notice is being submitted)
the reason for providing the register notice
the date of the relevant action and the registrable event day
the consideration paid for the interest

Land acquisitions

the nature of the land (agricultural, commercial or residential)
current and intended use of the land
location and size of the land
land title details
if relevant, information about the terms of any lease
percentage of interest held

Entity or business acquisitions

particulars of the entity or business in which the foreign investor has acquired an interest
the main location of the entity or business
the business structure and industry sector of the entity or business
the percentage interest acquired in the entity or business
the ANZSIC code of the entity or business

Mining or production tenement acquisitions

tenement licence details, (for example, tenement type, date of issue, expiry, renewal, State or Territory of issue, etc.)
location and size of the tenement (in hectares)

Register notices will need to be submitted online using the ATO’s new online services for foreign investors. The online service portal went live on 26 June 2023.

Setting up a myGovID

Foreign investors and their representatives will need a myGovID to access the service. myGovID is the Australian Government’s digital identity application, used to authenticate users who log in to use government services online.

Foreign investors should note the key points below so they are well prepared to use the new system once it goes live:

Foreign investors should get ahead of the new requirements by signing up for a myGovID now.
A myGovID should be set up using an individual email address (rather than an generic email or group inbox address).
Foreign investors without an Australian Business Number (ABN) will need a myGovID with ‘Basic’ identity strength, at a minimum.
Foreign investors with an ABN will need a myGovID with a ‘Standard’ or ‘Strong’ identity strength.
Once they have created a myGovID, foreign investors can authorise representatives to act on their behalf by linking their myGovID to their proposed representatives.
Representatives of foreign investors will need to set up their own myGovIDs, and will need to provide the following information to the foreign investor for linking purposes,
the full name used to set up the myGovID, and

an email address that can only be accessed by the representative.

Further details about the authorisation process are expected to be published on the ATO website from 26 June.

Impact for foreign investors

Additional compliance requirements

The new Register requirements will impose a greater compliance burden on foreign investors than under the existing regime. Foreign investors will be required to ensure they assess the Register requirements for all relevant transactions. In particular, some acquisitions of interests in land that do not require prior approval from the Treasurer (for example, foreign private persons entering into a simple office lease) may need to be to be notified to the ATO for inclusion on the Register. Once foreign investors have provided a register notice, ongoing monitoring will be required to ensure any relevant changes in circumstances are reported as well.

The existing reporting obligations, contained in sections 98C–98E of the FATA, will continue. Under the register amendment regulations, the giving of a register notice will discharge a foreign investor’s obligations under section 98C–98E, minimising the duplication of reporting requirements. However, where an action does not need to be notified for Register purposes (for example, the acquisition of equitable interests in Australian land), a foreign investor will still need to comply with the other notification requirements in the FATA.

Enforcement

The new Register requirements, combined with the new online system for making register notices, will take some getting used to. It is hoped that the ATO will take a lenient approach to compliance action in the initial phase of the rollout of the Register. Under the FATA, failure to comply with the Register requirements will be subject to a penalty of 250 penalty units, currently equivalent to A$68,750.

The Registrar may disclose information on the Register to certain other Australian Government personnel for the purposes of exercising powers under the FATA. Information gleaned from the Register could assist the ATO and FIRB in pursuing enforcement action under the FATA (for example, where Register information reveals that a foreign person failed to obtain the necessary approval before taking an action).

MinterEllison can help

Contact us if you have any questions regarding compliance with the new Register, or your obligations under Australia’s foreign direct investment regime more broadly.

Frequently asked questions

Does the Register apply retrospectively?

The Register does not cover transactions occurring before 1 July 2023. However, some Register obligations will indirectly apply to investments made prior to that date. Importantly, if a person becomes a ‘foreign person’ while holding a registrable interest in land, that person may be required to give a register notice – regardless of when the interest of land was first acquired. A similar rule applies if a person holds an interest in an entity or business and then becomes a foreign person. Even if that interest was held prior to 1 July, if the person becomes a foreign person after 1 July, they must notify the ATO (assuming that acquiring the interest would have required approval by the Treasurer if the person was a foreign person at the time of the acquisition).

Can a register notice be provided out of time?

We expect that foreign investors will still be able to lodge register notices even if they are out of time. While this might amount to a technical breach of the requirements under the FATA, late notification is always better than not providing notification at all.

The Treasurer has the power to extend the time afforded to foreign persons for giving register notices under section 58M of the FATR, however the process to obtain this extension has not yet been clearly outlined.

What ongoing reporting requirements are there?

As noted above, investors must notify the ATO as Registrar of certain changes in circumstances. Broadly, these include:

where a person becomes a foreign person while holding certain interests in Australian land, entities or businesses or registrable water interests, or while carrying on a national security business;
where a foreign person who holds such interests ceases to be a foreign person;
where there are certain changes to the interest held by a foreign person in an asset (e.g., the nature of land changes, or the percentage interest held in a corporation increases or decreases by more than 5%); and
where a ‘registered circumstance’ ceases to exist.

How do foreign investors give a register notice to the ATO?

Foreign investors should create a myGovID and, if required, link their authorised representatives, who can then lodge register notices on their behalf.

Register notices will need to be submitted online using the ATO’s new online services for foreign investors which became active on 26 June 2023.

What information needs to be included in a register notice?

This will depend on the action or change in circumstance being reported. Details of the foreign investor, the asset, and consideration and generally required. See further details set out above under the 'How to register?' section.

Will all members of a corporate group need to give a register notice when a member of the group acquires an Australian asset?

The tracing rules under the FATA mean that upstream interest holders can be deemed to acquire the interests of their downstream subsidiaries. Neither the FATA nor the register amendment regulations expressly address whether upstream entities need to separately provide register notices in respect of acquisitions by subsidiaries. It is hoped that only the direct acquirer will need to provide a register notice (in many cases FIRB and the ATO will be aware of the upstream interest holders who stand to acquire a deemed interest, as such information is required to be supplied in applications to FIRB for investment approval).

Can a single register notice cover several actions?

It is expected that this will be the case.

Do foreign investors need to register the acquisition of Australian assets even where approval from the Treasurer was not required for the transaction?

For certain land and tenement actions, yes. See the above tables for further details.

How much does it cost to give a register notice?

There is no fee for giving register notices.

Will the information on the Register be publicly accessible?

No. Each year the Commissioner of Taxation will prepare a report for the Treasurer on statistics derived from the Register, to be presented to Parliament. The statistics must not identify, or be reasonably capable of being used to identify, a person.

Contact

Alberto Colla

Partner, Melbourne
- +61 3 8608 2754
- +61 401 716 455

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