FIRB fees to double
Some staggering news for foreign investors in today's announcement by the Treasurer around the doubling of Foreign Investment Review Board (FIRB) application fees, with the increase to apply to all FIRB applications filed from 29 July 2022. This will bring the maximum application fee to a hefty $1,045,000.
Key points
FIRB application fees will double for all applications lodged from 29 July 2022
FIRB applications lodged before this date will not be subject to the higher fees
Background
On 22 July 2022, the Treasurer announced that from Friday 29 July 2022, all FIRB application fees will double (see the media release here ).
The announcement stated that the Albanese Labour Government was “delivering on its election commitment to increase foreign investment fees and penalties”, which was driven by the need to raise around $445 million to fund its housing affordability reform agenda.
Notably, we are yet to see any legislation released to increase the already onerous financial penalties for breaches of the FIRB regime.
The detail
The Government released amending regulations (the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Doubling) Regulations 2022 (Cth)) that double all FIRB application fees that become payable from 29 July 2022.
This will increase the maximum FIRB application fee from $522,500 to a staggering $1,045,000 (which will continue to be subject to annual indexing).
With application fees already disproportionately applying to agricultural land transactions, foreign persons entering into agricultural land transactions with a value of over $80 million will now be subject to a $1,045,000 FIRB application fee. By contrast, this maximum fee does not kick in for other transactions (excluding residential property transactions) until the value exceeds $2 billion.
Importantly, FIRB applications lodged on or after 29 July 2022 will be subject to the higher fees. The amending regulations do not apply retrospectively and will not impact upon applications filed before this date, where a fee assessment email has already been received.
For applications lodged before 29 July 2022 which have not resulted in the issue of a fee assessment email, there is some ambiguity around whether the higher fees will apply. Having regard to the approach taken by Treasury with previous fee reforms, we would hope that a reasonable position will be taken in this context to see the honouring of fees applying as at the date of the lodgement of the application.