Foreign Acquisitions and Takeovers Act 1975

Executive summary of update

This update to the Foreign Acquisitions and Takeovers Act 1975 introduces several key changes, primarily through the Treasury Laws Amendment (Fairer for Families and Farmers and Other Measures) Act 2024 and the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024. The most significant change is the replacement of the Administrative Appeals Tribunal (AAT) with the Administrative Review Tribunal (ART) for reviewing decisions, which impacts the appeal process for national security risk assessments. Additionally, the amendments clarify and refine the application of exemption certificates for foreign persons acquiring residential land, particularly concerning new and established dwellings. The update also includes minor technical corrections and updates to cross-references, ensuring consistency with other Commonwealth legislation.

Impacted parties

This update primarily affects foreign investors, legal and compliance teams involved in foreign investment applications, and government bodies responsible for administering the foreign investment framework, including the Treasurer and the Australian Taxation Office.

Change Analysis

1. Transition from Administrative Appeals Tribunal (AAT) to Administrative Review Tribunal (ART)

The legislation has been updated to replace all references to the Administrative Appeals Tribunal (AAT) with the new Administrative Review Tribunal (ART). This is a significant structural change in the administrative law landscape.

• Section 4 (Definitions): The definition of “AAT Act” has been replaced with “ART Act”, now referring to the Administrative Review Tribunal Act 2024.
• Section 130A (ART review of decisions): This section, which previously allowed for AAT review of certain decisions, has been amended to refer to the Tribunal (now defined as the ART). The process for applying for a review of a national security risk decision remains, but the forum has changed.
• Section 130M (Costs): This section, which deals with the awarding of costs in review proceedings, has been updated to reference the ART Act.
• Sections 130B to 130K and 130N: These sections, which detailed specific procedures and powers related to the AAT’s review process, have been repealed. The new framework relies on the provisions of the Administrative Review Tribunal Act 2024.

Implication: All new applications for review of relevant decisions under this Act will now be directed to the Administrative Review Tribunal. Legal and compliance teams must familiarise themselves with the procedures and rules of the new ART.

2. Amendments to Exemption Certificates for Residential Land

The update introduces changes to the conditions and application processes for exemption certificates related to residential land, affecting both developers and individual foreign investors.

• Section 57 (Exemption certificates for new dwellings): The reference to “manner and form approved by the Treasurer” has been removed, aligning the application process with the general requirements of Section 135.
• Section 58 (Exemption certificates for foreign persons): Similar to Section 57, the specific reference to the application manner and form has been removed, deferring to Section 135.
• Section 59 (Exemption certificates for established dwellings): This section has also been amended to remove specific application requirements, now governed by Section 135.
• Section 95 (Acquisition of interests in established dwellings): A key change is the removal of the requirement for a temporary resident to dispose of their main residence within 3 months of it ceasing to be their main residence. This provides more flexibility for temporary residents managing their property assets.

Implication: The process for applying for exemption certificates is now streamlined under a single provision (Section 135). The removal of the strict 3-month disposal rule for temporary residents offers significant relief and reduces the risk of penalties for those who may need more time to sell a property.

3. Clarification of Notice Requirements and Application Procedures

The update refines the process for submitting notices and applications, aiming for greater clarity and consistency.

• Section 81 (Compulsory notice of notifiable actions): The reference to the “manner and form approved by the Treasurer” has been replaced with a more general reference to the requirements of Section 135.
• Section 135 (Manner and form for notices and applications): This section has been amended to clarify that notices and applications are of no effect unless they comply with the manner and form approved by the Secretary. It also introduces a provision allowing the Secretary to accept a notice or application that “substantially complies” with the requirements, providing a degree of flexibility.

Implication: This change centralises the authority for determining the format of applications and notices with the Secretary, potentially simplifying the process for applicants. The introduction of a “substantial compliance” provision may reduce the risk of applications being rejected on minor technicalities.

Corrective and preventive actions

• Legal Team:
  • Section 4, 130A, 130M: Update all internal documentation, templates, and training materials to replace references to the “Administrative Appeals Tribunal (AAT)” with the “Administrative Review Tribunal (ART)”.
  • Section 130A: Review and understand the new procedures for seeking a review of a national security risk decision under the Administrative Review Tribunal Act 2024.
  • Section 95: Update advice provided to temporary resident clients regarding their obligations when they cease to occupy an established dwelling as their main residence, noting the removal of the 3-month disposal requirement.
  • Section 135: Ensure all future applications and notices are prepared in the manner and form approved by the Secretary, and advise clients on the new “substantial compliance” provision.
• Compliance Team:
  • Section 135: Update internal compliance checklists and procedures to reflect the new requirements for submitting notices and applications as approved by the Secretary.
  • Section 95: Review current monitoring processes for temporary residents holding property to ensure they are no longer being tracked against the now-repealed 3-month disposal rule.
• Operations Team:
  • Section 57, 58, 59: For teams assisting clients with applications for exemption certificates, ensure they are aware of the updated application process under Section 135 and use the latest approved forms.

Risks & opportunities assessment

Risks:

• The transition to the Administrative Review Tribunal (ART) may initially cause some uncertainty regarding procedures and precedents until the new tribunal’s practices are well-established.
• Failure to adhere to the new application and notice requirements under the updated Section 135 could result in applications being deemed ineffective, causing delays and potential compliance breaches.

Opportunities:

• The removal of the strict 3-month disposal requirement for temporary residents under Section 95 provides greater flexibility and reduces the risk of inadvertent non-compliance, making Australia a more attractive destination for skilled migrants and temporary workers.
• The introduction of a “substantial compliance” provision in Section 135 could reduce the administrative burden and costs associated with minor errors in applications, streamlining the approval process for investors.