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ATO takes aim at illegal foreign land bankers
The Australian Tax Office has cracked down on foreign investors breaking the nation’s foreign investment laws on land banking.
Foreign investor Guno Handojo was hit with a $370,000 fine by the Federal Court of Australia after failing to construct a dwelling on the vacant land within the required four-year timeframe.
To prevent “land banking”, Australia’s foreign investment rules require that it be put to good use and contribute to housing supply within four years.
Australian Tax Office (ATO) commissioner Jennifer Moltisanti said the action reflected the ATO’s commitment to ensuring foreign investors comply.
“Foreign investors and their representatives need to understand that buying residential land in Australia comes with clear and enforceable obligations,” Moltisanti said.
“Where foreign investors do not comply, we will take firm action, including court proceedings, to uphold the law and protect Australia’s national interests.”
The ATO identified the breach through its compliance program, which includes data matching and audits of foreign investment approvals.
During the proceedings, the federal court granted freezing orders over the land to prevent disposal of the asset before an outcome was reached.
While the ATO encourages voluntary compliance, Moltisanti said the case should warn foreign investors and their advisers that the body would take strong enforcement action when required.
“The ATO can and will use its powers to bring foreign-held land that has been illegally banked by foreign investors back into the housing market, which may include forced sale of the land.”
“Foreign property owners who think they can simply ignore their Australian legal responsibilities are sorely mistaken, and this court outcome demonstrates that,” Moltisanti said.
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