Federal treasurer Joe Hockey – still in his job following the ousting of Tony Abbott as prime minister on Monday – announced today the government is investigating a billion dollars worth of foreign-owned property.
“As of today there is over 500 investigations in over $1 billion in real estate held by foreign nationals in Australia,” said the treasurer.
Hockey said there has been seven properties divested already — one of those being the jaw-dropping $39 million Sydney mansion recently sold by one of China’s richest men — and confirmed that an additional five properties unlawfully held by foreign nationals have been ordered to sell.
“The properties are located in Ardross (in Perth), Elizabeth Bay (in Sydney), Underdale (in Adelaide), Stretton (in Brisbane) and Labrador (on the Gold Coast),” he said.
“The purchase prices of the properties range in value from $265,000 to $8.1 million.
“They now have 12 months to sell the properties, rather than the normal three month period, and will not be referred for criminal prosecution.”
Since transferring residential real estate compliance functions to the Australian Taxation Office in May, Hockey said that over 3,000 pieces of information relating to suspected breaches had been identified.
Speaking along side Hockey, the ATO commissioner Chris Jordan said the majority of those are community referrals, “community dob ins”.
Jordan said the ATO was using an “immense” amount of data analytics including data from the Foreign Investment Review Board, the immigration office, AUSTRAC and state and territory land title offices.
Hockey said he expects more divestment orders to be announced in the future and warned those who have illegally purchased existing residential real estate that their time to voluntarily come forward is running out.
“They have until 30 November 2015 to come to us before we come to them,” he said.
“They will still be forced to sell the properties if they are found to be in breach of the laws, but they will not be referred for criminal prosecution.
According to the ATO commissioner a surprising amount of the foreign investor investigations centre around student owners.
“We are seeing examples of very young people, who are here on student visas, who have not lodged a tax return, who are buying $5 million properties,” he said.
“There are spin offs, including checking where the income has come from, from undeclared work or the proceeds of crime,” he said.
“We know there are billions of dollars of sales revenue that are not being booked in Australia… we don’t have a lot of information about their cost structure.”
Hockey reiterated that Australia’s foreign investment policy for residential real estate was designed to increase Australia’s housing stock and help Australians.
“Those who break the rules and purchase established property illegally are doing so to the detriment of all Australians,” he said.
“Last month I introduced legislation into Parliament to ensure that the reporting requirements, enforcement and penalty regimes for foreign investors who break the rules are stricter and more significant. These laws are being debated in the House of Representatives today.”
The crackdown on foreign investors also came with a warning for multi-national businesses not paying their fair share of tax, and an announcement that GST on overseas purchases will be introduced to the senate in the next fortnight.