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ATO secures second civil penalty against residential land bankers

Australian Taxation Office

The Australian Taxation Office (ATO) has secured a second civil penalty order against a foreign investor who failed to meet Australia's foreign investment rules for vacant residential land.

Fengqin Li was ordered to pay a penalty of $508,000 after failing to complete construction of a residential dwelling on vacant residential land within 4 years, as required by the conditions of their foreign investment approval.

ATO Assistant Commissioner Jennifer Moltisanti said that the ATO initiated compliance action against Li after identifying the breach through intelligence from data matching and their land banking audit program. The ATO is undertaking a comprehensive audit of all foreign investment approvals requiring development of residential land. This audit seeks to identify and address land banking behaviour where a foreign investor may hold land for future gain rather than putting it to productive use through development. 

‘We welcome this second positive outcome for the ATO’s land banking audit program, demonstrating our commitment to ensuring compliance with the law and protecting Australia’s national interests.’

‘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,’ Ms Moltisanti said.

While Li initially responded to the ATO's enquiries, she subsequently chose not to engage further with the ATO and failed 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.’ Ms Moltisanti said.

Despite Li's failure to engage, the ATO continued its compliance action and successfully obtained a civil penalty order through the Federal Court. During the proceedings, the Federal Court granted freezing orders over the land to prevent its disposal before the matter was finalised.

The ATO also took steps to recover outstanding vacancy fee liabilities linked to a separate residential property held by Li. To secure payment of these outstanding amounts, the ATO registered 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,’ Ms Moltisanti said.

In 2024–25, the ATO forced remediation of 217 breaches of the foreign investment rules, including the disposal of 111 residential properties. 

This outcome follows the significant penalty ordered in The Commissioner of Taxation v Handojo, handed down earlier this month and sends a clear message that where foreign investors fail to comply, strong enforcement action will follow.

Notes to journalists


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