FIRB: 2024 outlook and foreign investment 2023 recap

8 minute read  25.01.2024 Alberto Colla, Thomas Galloway, Ryan Doskey, Meaghan Philp

Australia's foreign investment landscape continues to evolve, with increased fees, stricter compliance, and deeper scrutiny of tax arrangements.


Key takeouts


  • FIRB filing fees for investments in residential property are changing. Fees for investments in established dwellings will rise significantly, but lower fees will be introduced for 'build to rent' projects.
  • The monetary thresholds are increasing modestly due to annual indexation. The threshold for many investments in developed commercial land and business investments is increasing to A$330m, with investment in sensitive land increasing to A$71m.
  • Tax conditions on FIRB approvals are becoming more rigorous. Concerns about tax leakage will continue to be a key focus for FIRB and the ATO in 2024.

Reflecting on the key developments in 2023, we anticipate 2024 will be a pivotal year for foreign investment in Australia. We profile key updates that foreign investors - particularly private equity funds and those investing in Australian residential land - should keep on their radar. To close, we forecast what's on the horizon in 2024 for foreign investment in Australia

Indexation of monetary thresholds

Monetary thresholds – the dollar value used to determine which proposed investments may require FIRB approval – are subject to annual indexation on 1 January each year. In 2024, a modest increase (approximately 6%) has been applied across most types of investments, with a $0 threshold continuing to apply to foreign government investors across all transaction types.

The key changes to the thresholds are summarised below:

  • the threshold for non-sensitive commercial land and standard commercial transactions has increased from A$310m to A$330m;
  • the threshold for investments in sensitive land and agribusinesses has increased from A$67m to A$71m; and
  • the threshold applicable to Australia's Free Trade Agreement Partners has increased from approximately A$1.3b to around A$1.4b.

The full list of indexed figures are outlined on the 'Foreign investment in Australia' website.

Proposed fee increases for residential land

The Australian Government is set to introduce legislation with measures designed to increase the supply and affordability of housing in Australia. The following four proposed changes were announced on 10 December 2023.

Foreign investment application fee for the purchase of established dwellings will triple

Under Australia's foreign investment regime, residential land may be classified as an established dwelling, a new dwelling, or vacant land. Foreign investors are typically not permitted to acquire established dwellings except under specific circumstances such as when the investor is a temporary resident or will redevelop the property.

Under the current framework, application fees are the same regardless of the type of residential land. These fees range from $14,100 to $1,119,1000 depending on the purchase price. The Government has suggested that increasing the fee for established dwellings will encourage foreign buyers to purchase vacant property and invest in new housing developments, both of which will bring about new housing stock and bolster the construction industry.

Vacancy fee for foreign-owned dwellings will double

Foreign investors who have purchased residential land since 9 May 2017 must pay an annual vacancy fee if their property is not residentially occupied or genuinely available on the rental market for at least 183 days in a 12-month period.

The vacancy fee is generally the same amount as the application fee for residential land and serves to incentivise foreign investors to make their unused properties available on the rental market. The doubling of this fee is intended to strengthen this measure. Investors that make new purchases of established dwellings may see a six-fold increase in vacancy fees when combined with the tripling of application fees.

Foreign investment application fee for 'build-to-rent' projects will be calculated in accordance with the fees required for commercial land

Depending on the type of property, build-to-rent projects may currently be subject to residential land application fees which are significantly higher than the application fees for commercial land.

Under the proposed changes, in an effort to boost foreign investment in this area, applications for build-to-rent projects will be subject to the lower commercial land application fee, regardless of the type of land involved.

The Australian Taxation Office will tighten compliance actions

This will likely involve increased monitoring and the use of infringement notices, however details of the enhanced compliance mechanisms have yet to be announced.

Elevated tax disclosures and tax conditions for PE firms

The Australian Financial Review reported that the Australian Treasurer, Jim Chalmers, has directed FIRB to engage in a more rigorous review of foreign private equity funds' tax arrangements when screening proposed transactions. Private equity funds may now be required to provide FIRB with tax advice from Australian accountants and lawyers.

Additionally, FIRB has also introduced increasingly bespoke tax conditions on FIRB approvals. These can include the requirement to disclose any contractual agreements related to the transfer of intellectual property offshore, irrespective of whether this relates to an intercompany transfer or divestment to a third party, whether before or after closing. We have seen these conditions applied to a range of investors, not just PE firms. FIRB's use of tax conditions will be a key area to watch in 2024.

It is imperative that private equity investors in Australia pay close attention to these and other developments in Australian FDI regulation. See our comprehensive report on Demystifying FIRB for PE houses, relevant to both domestic and foreign private equity firms, given the broad scope of the regime.

Foreign investment 2023 in review

Application processing times

In the latest Quarterly Report on Foreign Investment released by the Australian Treasury for the quarter of April to June 2023, the median processing time for commercial investment proposals was 36 days, down from 42 days in the previous quarter. The Treasury attributed this decrease to improvements in its internal efficiencies, and a reduction in the overall number of commercial investment proposals. As expected, given the recent heightened tax scrutiny by FIRB, we are starting to see an increase in foreign investment application processing times. Investors with more complex proposals should expect longer processing times than the 36-day average (sometimes up to several months).

Source countries for investment

In the April to June 2023 quarter, the top 5 leading source countries for approved commercial investment proposals (not including residential real estate proposals) were:

  1. Japan (A$11.7b);
  2. Singapore (A$3.4b);
  3. the United States (A$3b);
  4. South Korea (A$1.8b); and
  5. Canada (A$1.7b).

The largest target sector for investment was Services with a total direct investment value of A$12.5b.

China was the largest source country of investment for approved residential real estate proposals (A$1.1b), followed by Hong Kong SAR (A$0.2b) and Vietnam (A$0.1b).

Critical minerals and blocked transactions

Critical minerals will be a key sector to watch in the coming year as Australia continues to refine its approach to foreign investment in this area. In 2023, the Australian Government introduced the Critical Minerals Strategy 2023-2030 which places a central focus on bilateral partnerships and the push to attract foreign investment that aligns with the 'national interest'. Critical minerals are classified as a sensitive sector and the Treasurer has previously rejected certain proposed acquisitions in this area.

The Australian Treasurer made two prohibition orders in 2023 blocking deals involving Chinese investment into the critical minerals sector. In February 2023, the Treasurer blocked a Chinese-linked investment fund from increasing its stake in Northern Minerals Limited from 9.98% to 19.9%. Further, in July 2023, the China-linked mining company, Austroid Corporation, was prohibited from acquiring 90.10% of lithium miner Alita Resources Limited. This acquisition would have brought its stake in Alinta Resources to 100%. The Australian subsidiary of Austroid Corporation, Austroid Australia Pty Ltd, was also barred from wholly acquiring Alita Resources Limited. It is important to note that not all proposed investments that the Australian Government has concerns about end up being formally prohibited. Where the Treasurer is unlikely to approve a transaction, applicants are provided with an opportunity to withdraw their application to prevent a prohibition order from being made (such orders being publicly available). Treasury reports on the numbers of withdrawn applications, but the reasons for withdrawal are not disclosed.

Recent appointments to Foreign Investment Review Board

Although much of the Foreign Investment Review Board's work is handled at the working level (by public servants employed at the Department of Treasury), all significant investment proposals are reviewed by members of the board, who recommend to the Treasurer (and sometimes the Assistant Treasurer) whether to approve applications and whether conditions should be applied. In this capacity, the members of the board play an important role in shaping foreign investment outcomes and policy in Australia.

The composition of the Foreign Investment Review Board undergoes regular renewal. The end of 2023 saw a raft of new appointments to the Foreign Investment Review Board. Linda Apelt, Sarah Pearson and Kellie Benda were appointed in December 2023 and will each serve a five-year term.

Ms Apelt has held key roles in the Queensland government, including representing Queensland in the UK and Europe. Dr Pearson has wide-ranging experience in various sectors, from technology to food sciences, and has held leadership roles at DFAT and ANSTO Nuclear Medicine. Ms Benda has extensive experience across a range of critical infrastructure-related industries, including mining, energy, utilities, technology, health, and agriculture. Ms Benda has acted in a senior executive capacity for AGL Limited, Origin Energy Limited, Emeco Holdings Limited and Aurizon Limited.

2024 outlook for foreign investment

In 2024, rapidly progressing technologies like AI and an increased focus on the renewable energy transition, will give rise to new opportunities that are likely to attract foreign capital into Australia. At the same time, geopolitical tensions will continue to simmer with foreign investment screening measures across the developed world likely to continue tightening. Obtaining timely and considered advice on FDI will continue to be a key factor in successful dealmaking.

In the current global climate, there is a lot to navigate and to be excited about in terms of opportunities available to clients across a number of industry sectors. Our national FIRB team remains dedicated to working with clients globally to tailor solutions for their business goals. We look forward to connecting with you regularly throughout the remainder of 2024.


For further information or assistance with navigating Australia's FDI regime, please contact MinterEllison's team of FIRB specialists.

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