Commonwealth Numbered Regulations - Explanatory Statements

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FOREIGN ACQUISITIONS AND TAKEOVERS REGULATIONS (AMENDMENT) 1995 NO. 416

STATUTORY RULES 1995 No. 416

ISSUED BY THE AUTHORITY OF THE ASSISTANT TREASURER

Foreign Acquisitions and Takeovers Act 1975

Foreign Acquisitions and Takeovers Regulations (Amendment)

Section 39 of the Foreign Acquisitions and Takeovers Act 1975 (the Act) provides for the GovernorGeneral to make regulations prescribing all matters required or permitted by the Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Subsection 12A(8) provides for regulations to be made removing specified categories of urban land acquisition from the notification or examination under the Act.

The amendment replaced the existing regulation 3(p) to exempt acquisitions of non-residential commercial land valued at less than $5 million that is not vacant land or land, the whole or part of which comprises an accommodation facility. An accommodation facility is defined in the Regulation to mean premises used, or suitable for use, as accommodation of persons on either a long-term or short-term basis, including, in particular, hotels motels, guesthouses, serviced apartments and holiday units. Land is defined in section 5 of the Act to include a building or other structure, or a part of a building or other structure.

The amendment is designed to protect the intent of foreign investment policy that foreign interests require foreign investment approval to acquire all vacant land. The amendment makes this explicit by excluding vacant land from the scope of the regulation 3(p). Foreign investors will still be able to apply to acquire vacant land under the Act and could normally expect to receive approval on the condition that continuous development is commenced within twelve months, provided the acquisition does not raise any issues which are considered contrary to the national interest. The imposition of a development condition on the acquisition of vacant land is designed to prevent land banking by foreign interests and therefore ensure such acquisitions are not contrary to the national interest.

The amendment to Regulation 3(p) also excludes land the whole or part of which comprises an accommodation facility. The amendment is designed to protect the integrity of the foreign investment policy as it applies to residential real estate, by ensuring that the policy cannot be undermined through acquisition of 'commercial' properties that may potentially be used for residential purposes. For example, through the acquisition of strata titled hotels, motels and serviced apartments or through the acquistion of guesthouses and holiday units. Foreign interests will still be able to submit and receive foreign investment approval, consistent with the Government's policy in relation to the services sector, to acquire hotels and motels where they do not have the potential to undermine the residential real estate policy. These proposals will be considered on a case by case basis.

The amendment to regulation 3(f) is a consequential change flowing from the introduction of the definition of accommodation facilities. Effectively the previous reference to 'hotels motels or tourist facilities' is replaced with a reference to 'accommodation facilities'.