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Australia issues stern warning to rogue foreign investors

Xinhua, June 9, 2015 Adjust font size:

Australia has issued a clear warning to foreign investors who may have bent the rules on residential real estate: come forward now or face jail later.

On Tuesday, Treasurer Joe Hockey announced the Foreign Investment Review Board (FIRB) was investigating 195 cases of foreign investment rule breaches on residential real estate, including 40 cases where suspicious neighbors had informed authorities.

The widened probe comes as concerns mount that rogue foreign investors are helping fuel an enormous property bubble in Sydney and Melbourne, the country's two largest cities.

The government announced last month it would crack down on shady investors and uphold foreign investment laws that prohibit them from purchasing existing residential real estate. Foreign investors may still purchase new homes.

From Dec. 1, when the grace period ends, foreign residents who unlawfully purchased established property face criminal penalties of up to 98,000 U.S. dollars or three years jail. Companies face fines of almost 500,000 U.S. dollars.

"Foreign investors who think they may have broken the rules should come to us before we come to them," Hockey said in a statement.

"They will still be forced to sell the properties, but will not be referred for criminal prosecution if they voluntarily come forward before 30 November."

He said the Australian Tax Office (ATO) had the ability to cross-reference its own data with that of the FIRB, immigration, the Australian Transaction Reports and Analysis Centre and state and territory titles offices.

"The ATO has the capacity to cover more than 600 million transactions annually," he said. "The ATO's data matching program is already getting results. For example, they have identified one foreign investor who appears to be linked to over 10 properties ranging from a $300,000 (231,000 U.S. dollars) unit to a house worth $1.4 million (1.08 million U.S. dollars)."

Of the 195 cases currently open, 24 foreign investors had voluntarily come forwards to identify they may have breached the law.

Another 40 cases were initiated upon evidence from neighbors who suspected foreign investors may have broken the rules by using complex structures and illegal leasing arrangements to hide foreign ownership. Endi