Australian Federal Treasurer Jim Chalmers has announced significant changes to Australia’s foreign investment regime aimed at protecting the economy and national security. While established foreign investors will benefit from accelerated approvals, others may expect greater scrutiny when investing in sensitive industries.
The change is being driven by “national security concerns” and the Australian Government’s new “Future Made in Australia” policy. This innovation protects government oversight of sensitive industries such as supply chains, critical infrastructure, data, and critical minerals, while also allowing applications in non-sensitive areas by known investors with a good compliance track record. The purpose is to streamline.
Key highlights of changes:
- Application process:
- More Many resources will be invested. Investments close to defense land (e.g. not directly on defense land) are always a gray area and subject to ‘future guidance’. This appears to be currently attracting the government’s attention. Applications to these types of investments will be scrutinized “to ensure that all risks are identified, understood and managed.” This likely means longer evaluation times and the potential for new, more difficult situations to arise.
- Although there was no mention of specific jurisdictions being targeted, the Treasury Secretary said the government’s focus was on the industry, the structure of the deals and who was investing, and that this was true across the board. It pointed out.
- Applications from “low risk” investors (including investors with good compliance records and known entities such as pension funds) may experience faster approval times and lower ongoing compliance costs (We assume this means fewer conditions apply to these investors). The Treasury has set a target of disposing of 50% of the cases within the original statutory period of 30 days from January 1, 2025. This is an ambitious goal, as this is rarely achieved today. In our view, this goal will not work without significantly more resources. Dedicated to the Ministry of Finance.
- Investors who are active in the market and routinely file FIRB filings may also face less red tape if the investor’s upstream ownership structure remains unchanged.
- These changes follow recent announcements regarding changes to Australia’s merger control system, meaning that from 1 January 2026, the Australian Competition and Consumer Commission (ACCC) will no longer be able to file competition claims by foreign merger proponents. said that the information provided to the ACCC regarding this was largely sufficient. Consideration of competition issues under the foreign investment framework.
- The Finance Minister suggested that streamlining the “unclassified” parts of the FIRB regime would allow the FIRB to focus on more complex projects, such as reviewing past projects, including those that the FIRB had previously approved.
- In a new move, the Treasurer also promised to refund application fees to unsuccessful bidders in competitive deals, with the aim of “enhancing competition” among investors. Credit notes are currently granted, but only in certain circumstances.
- conditions: The ATO has recently placed greater emphasis on investor tax arrangements, particularly fund structures, through the FIRB approval process, and this will continue to result in further focus (and scrutiny) on overly complex tax structures and arrangements. will continue. Non-standard tax conditions will continue to arise. This may influence the analysis of whether a voluntary declaration is recommended or filed, as there is an increased risk that a tax condition will be applied to the transaction and may also impact the overall tax (See below for “call-in” permissions). Analysis of transactions. In some cases, this may be the determining factor in whether mandatory FIRB approval is required. The Government is proposed to publish updated guidance on this, including ensuring that foreign investors “pay their fair share of tax”.
- compliance: The government is working to expand the FIRB compliance team to strengthen monitoring and enforcement of conditions imposed on investments as part of the FIRB approval process. This includes the potential for increased use of on-site visits not only by FIRB compliance officers, but also by officers from other government departments.
The finance minister is also proposing changes that would “strengthen” the government’s powers to “call” a deal for 10 years after completion if FIRB approval was not obtained as it was not mandatory at the time. “No investment stays exactly the same for long periods of time,” he told local media. “A normal, self-respecting country like Australia should have the ability to go back to those deals if necessary.” I was told. This could give rise to concerns about sovereign risk and transaction certainty, particularly in the sectors mentioned above, making investors (and their advisors) more cautious and encouraging voluntary This could mean that FIRB approval may be sought or recommended. Mandatory FIRB approval is not strictly necessary, but please note that in such situations there is a risk that taxes and other conditions may apply to the transaction.
White & Case will continue to monitor developments in changes, including any proposed changes to the law.
In the meantime, if you have any questions about how this might impact you, our Australian FDI team is here to help.
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