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Changes to the rules governing foreign purchases of Australian agricultural land

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The Prime Minister, together with the Treasurer and Minister for Agriculture, have finally announced the lower screening thresholds for foreign investment in agricultural land.

These new thresholds will operate from 1 March 2015.

The new threshold of A$15 million is a substantial reduction from the current A$252 million for purchases of agricultural land by foreign persons.  There will also  be a cumulative threshold applied for the operation of the regime. Once a foreign person holds or is about to hold agricultural land with a total value of A$15 million or more, notice for prior approval of the acquisition will be required.

Once implemented, the changes are expected to apply to all investors including prescribed investors from South Korea, Japan, Chile and China. The new threshold was included in the recent free trade agreements entered with those countries. (As treaties were already in place with the United States and New Zealand, investors from those countries will continue to benefit from the A$1,094 million threshold).

The Government will also establish a foreign ownership register of agricultural land. Whilst specific details of the register have not yet been released, the Australian Taxation Office (“ATO”) is to have the job of monitoring foreign ownership of agricultural land and maintaining the register.

The reduced thresholds,  particularly the cumulative A$15 million threshold, will see a major lift in the number of applications to be considered by the  Foreign Investment Review Board. While it is a rare event for a rural property to be valued in excess of the current A$252 million threshold, the cumulative A$15 million threshold will mean a significantly higher proportion of foreign investors will be required to seek approval for their acquisitions of agricultural land .

 For more information on foreign purchases of Australian agricultural land or any other property inquiries, please contact our Property & Leasing team by email property@mst.com.au or by telephone +61 8540 0200.