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Foreign investor hit with $508k penalty over land banking
The Australian Taxation Office (ATO) has continued its crackdown on foreign investors, fining a second overseas landlord for failing to build residential dwellings within the timeframe.
The Australian Taxation Office (ATO) has continued its crackdown on foreign investors, fining a second overseas landlord for failing to build residential dwellings within the timeframe.
The ATO has won a second civil penalty case against a foreign investor accused of breaching Australia’s rules on purchasing vacant residential land.
Fengqin Li has been ordered to pay a $508,000 penalty after failing to build a residential property on vacant land within the four-year timeframe attached to their foreign investment approval.
Li is the second foreign investor to be fined for land banking.
The ruling followed an audit of foreign investment approvals requiring residential land to be developed, aimed at identifying land banking where vacant sites are held for future gain rather than developed.
ATO Assistant Commissioner Jennifer Moltisanti said that the tax regulator initiated compliance action against Li after identifying the breach through intelligence from data matching and their land banking audit program.
“This sends a clear message to foreign investors that land banking, which limits housing supply for the Australian community, will be met with significant consequences,” Moltisanti said.
According to the ATO, while Li was initially cooperative, she decided not to engage further with the agency’s enquiries, failing to meet her obligations under Australia’s foreign investment framework.
“Foreign investors need to understand that buying residential land in Australia comes with clear obligations under Australia’s foreign investment framework.”
“These obligations will be enforced even where the investor is offshore or disengaged,” Moltisanti said.
Ultimately, the ATO secured a civil penalty order in the Federal Court, which also imposed freezing orders over the land to prevent it being sold before the case was resolved.
The taxman also pursued unpaid vacancy fees tied to another residential property held by Li, securing the outstanding debt with a charge over the vacant land.
“Where foreign investors do not abide by the law, the ATO can and will use its powers to bring illegally ‘land-banked’ property held by foreign investors back into the Australian housing market. This may include the forced sale of land,” Moltisanti said.
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In 2024–25, the ATO forced remediation of 217 breaches of the foreign investment rules, including the disposal of 111 residential properties.
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