By Jaya Prasad
From 29 July 2022, Foreign Investment Review Board (“FIRB”) application fees have doubled, following the introduction of amending legislation to the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 by the Federal Government on 21 July 2022.
The amending legislation makes changes to a range of FIRB application fees and penalties set out under the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Fee Doubling) Regulations 2022.
Changes to the FIRB fee structures and penalties were earmarked as a pre-election promise by the Labor government earlier this year and while the increase should not come as a surprise to investors, the quantum of the increase will no doubt have a significant effect on foreign investor decision-making.
From 29 July 2022, the FIRB application fee structure will increase as follows (including increase to the maximum annual fee cap to $1.045m):
| Acquisition action | Consideration for action | Previous fee (payable before 29 July 2022) |
New fee (payable on or after 29 July 2022) |
| Residential Land | Less than $75,000
$1m or less $2m or less $3m or less $4m or less Over $40m |
$2,000
$6,600 $13,200 $26,400 $39,600 $522,500 maximum fee |
$4,000
$13,200 $26,400 $52,800 $79,200 $1,045.000 maximum fee |
| Agricultural Land | Less than $75,000
$2m or less $4m or less $6m or less $8m or less Over $80m |
$2,000
$6,600 $13,200 $26,400 $39,600 $522,500 maximum fee |
$4,000
$13,200 $26,400 $52,800 $79,200 $1,045.000 maximum fee |
| Commercial land, tenements, businesses and entities (excluding land entities) | Less than $75,000
$50m or less $100m or less $150m or less $200m or less Over $2bn |
$2,000
$6,600 $13,200 $26,400 $39,600 $522,500 maximum fee |
$4,000
$13,200 $26,400 $52,800 $79,200 $1,045.000 maximum fee |
| Starting an Australian business | - | $2000 | $4000 |
| Entering material agreements and associated documentation | - | $13,200 | $26,400 |
| Internal reorganisations | - | $13,200 | $26,400 |
In a media statement[1] announcing the fee increases, the Federal Government stated that while foreign investment “plays a crucial role in Australia’s economic success”, the decision to increase FIRB fees was required to “ensure the cost of administering the foreign investment framework is not borne by Australians” and as necessary to support the Federal budget.
Foreign investment in the mining sector in Australia may attract FIRB applications and approvals across a range of acquisition actions, including foreign entities acquiring any interest in:
- mining tenements (including exploration tenements and some general purpose licences that involve an interest in Australian land);
- commercial and/or agricultural land located in Australia required to carry on mining operations;
- the securities of a mining, production or exploration entity;
- existing Australian entities and businesses;
- internal restructures; and
- significant contracts and associated documents.
Foreign acquisition of royalty interests in respect of mining tenements will continue to be exempt from FIRB assessment where the acquisition does not lead to an interest in land or any right to occupy, control or influence any land arising.
FIRB has previously flagged investment transactions involving critical minerals (including rare earth elements, lithium, vanadium, cobalt, copper, nickel) will attract increased scrutiny in the investment process. Stable minerals such as coal, iron ore and gold do not typically attract the same level of scrutiny.
[1] https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/increase-foreign-investment-fees-and-penalties
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