'Land banking' foreign investor busted by ATO
Australian Taxation Office
The Australian Taxation Office (ATO) is cracking down on foreign investors who break Australia’s strict foreign investment rules by ‘land banking’ vacant land.
On Tuesday, the Federal Court of Australia found that Guno Handojo breached the development conditions attached to their foreign investment approval after failing to construct a residential dwelling on vacant land within the required timeframe of 4 years, and ordered a penalty of $370,000.
ATO Assistant Commissioner Jennifer Moltisanti welcomed the outcome and said that this action demonstrates the ATO’s commitment to ensure compliance by foreign investors.
‘Foreign investors and their representatives need to understand that buying residential land in Australia comes with clear and enforceable obligations,’ Ms Moltisanti said.
‘Where foreign investors do not comply, we will take firm action, including court proceedings, to uphold the law and protect Australia’s national interests.’
Foreign investors who purchase vacant residential land are generally required to build within 4 years under Australia’s foreign investment rules, ensuring land is put to productive use and contributes to housing supply.
The ATO identified the breach through its compliance program targeting land banking, including data matching and audits of foreign investment approvals. The ATO uses extensive data and intelligence to identify foreign investors who fail to comply with the Foreign Acquisitions and Takeovers Act 1975 and the foreign investment framework.
During the proceedings, the Federal Court granted freezing orders over the land to prevent its disposal prior to the court’s outcome.
‘This case should serve as a warning to foreign investors and their advisers,’ Ms Moltisanti said.
‘The ATO can and will use its powers to bring foreign-held land that has been illegally banked by foreign investors back into the housing market, which may include forced sale of the land.
‘Foreign property owners who think they can simply ignore their Australian legal responsibilities are sorely mistaken, and this court outcome demonstrates that.’
The ATO promotes voluntary compliance with the foreign investment rules. However, where foreign investors seek to avoid or obstruct compliance, including by failing to develop approved land or obscuring beneficial ownership, stronger enforcement action will follow.
Notes to journalists
- This matter is subject to appeal from the foreign investor.
- For more information visit Our approach to foreign investment compliance.
- A high-resolution headshot of Assistant Commissioner Jennifer Moltisanti is available for download from our media centre.
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Contact details:
ATO Media Unit | 02 621 61901 | [email protected]