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If you are a foreign person who stands to inherit residential property under a will, your acquisition may fall subject to Australia’s Foreign Investment Review framework. Previously, a foreign person was not required to notify the Treasurer if their acquisition, if their legal or beneficial interest in Australian land was transferred under a will. This exemption has now been abrogated by the Foreign Investment Review Board. Since 1 January 2021 those who fail to seek approval will be subject to civil or criminal penalties issued by the Board for non-compliance.
Under the amended Foreign Acquisitions and Takeovers Act 1975, any foreign person proposing to take a ‘notifiable action’ is required to inform the Treasurer before the action is taken. All acquisitions relating to an interest in Australian land is a notifiable action, whether the land be residential, agricultural or to be used for commercial purposes. In circumstances where a beneficiary does not know of their legal or beneficial interest in residential land until after administration of the will, they can notify the Treasurer within 30 days of acquiring the interest. In some situations, applying for approval will be unnecessary, if the acquisition falls under an existing exemption from the legal requirements. However, foreign persons should treat the known existence of a will as an indicative sign to notify.
For a legal or beneficial interest acquired by devolution or operation of law, foreign beneficiaries will not be required to seek approval from the Treasurer. For this exception to apply, the acquisition must be a legal consequence flowing from an involuntary act. An intestate estate where land was distributed according to Australia’s laws of succession is an example of how this exception can apply. The acquisition in question must not require any voluntary act on part of the beneficiary who stands to inherit the land. If a settlement or agreement is necessary for the interest to be acquired, the result is no longer an automatic consequence of law and not exempt from the legal requirements.
The purpose of applying for foreign investment approval is to receive a ‘no objection notification’ from the Treasurer. This will effectively prevent the Treasurer from, being able to issue a disposal order in relation to the acquisition at a later date.
Applications for a No Objection Notification do attract an application fee, and are submitted through the Australian Tax Office website. Foreign persons a required to pay a fee for each application made, which are generally payable at the time of lodgment. The application fees vary according to the value of the acquisition in question, and the type of land which approval is being sought for. In the event a person submits an application, and the review board considers that person was not required to do so, they are entitled to a refund of their application fee.
If you require legal advice regarding your inheritance, we encourage you to contact our office on (07) 3839 8011 to schedule a meeting with our lawyers Fabrizio Fiorino e Fabio Orlando.
Article written by Jenna Behr of our Brisbane office.
