Before answering this question, we should first understand what agricultural land is. Under the foreign investment framework, agricultural land means land in Australia that is used, or could reasonably be used, for a primary production business. The meaning and scope of a primary production business can be found in the Income Tax Assessment Act 1997. It includes, for example, cultivating or propagating plants, fungi or their products or parts, maintaining animals for the purpose of selling them or their bodily produce, or manufacturing dairy produce from raw material that you produced.
If your land falls into the category of agricultural land, then the foreign buyer must get approval for the proposed acquisition from the Treasurer if the threshold of $15 million is exceeded. You may think that the value of your agricultural land is below $ 15 million, so there is no need to worry about the approval. However the $15 million threshold is defined as the cumulative value of agricultural land holdings owned by the foreign person (and its associates). For example, if foreign company A proposes to buy your agricultural land valuing $5 million, but it (or its subsidiary company) has already acquired an agricultural land valuing $11 million in Australia, then the proposed transaction would be subject to approval by the Treasurer.
There are exemptions to the above general rule, for example:
1. No threshold applies to foreign government investors; ie; any investment by a foreign government needs approval;
2. Higher thresholds apply to non‑foreign government investors from certain countries (e.g. a $1,154 million threshold applies to US, New Zealand and Chilean investors, and a $50 million threshold applies to Thai investors, and these thresholds are not cumulative);
3. The thresholds do not apply to certain acquisitions of agricultural land by owners or operators of wind or solar power stations.
If the proposed sale of your agricultural land requires approval, the application should be lodged by the foreign buyer with the Foreign Investment Review Board (FIRB). You could not complete the transaction until an approval is granted.
Lastly, the foreign person’s acquisition of your agricultural land must be notified to the ATO, regardless of whether it requires approval and regardless of value.
If you should have any questions in respect to the purchase of land by foreign investors, please contact me at Everingham Solomons because, Helping You is Our Business.
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