Foreign Acquisitions and Takeovers Fees Imposition Act 2015

The core concept is the imposition of a fee as a tax. The distinction between a fee for service and a tax is significant in public law. A fee ordinarily represents payment for a specific government service or benefit, whereas a tax is an exaction for general public revenue. By declaring the fee a tax, the Act likely removes any requirement that it be proportionate to the cost of processing applications or monitoring compliance. The amount can be set higher than administrative costs, effectively operating as a barrier or levy on foreign investment. The Act also introduces a cap on the fee amount, currently $7,000,000, which is indexed from July 2024 using a CPI-based factor. Indexation maintains the real value of the cap but does not adjust for increases in property values or transaction sizes that may outpace inflation; this means the effective burden on large transactions could diminish over time if CPI grows slower than asset prices. The regulations are the operative mechanism. Subsection 6(1) leaves the entire fee schedule to delegated legislation. Paragraphs 6(2)(c) to (f) allow for nil amounts, reductions for multiple fees on a single agreement, and revised amounts if circumstances change after the fee becomes payable. The note to subsection 6(2) gives examples: indexation, lower amounts if certain circumstances exist, and reduction to nil if a jointly and severally liable person pays. This flexibility means the government can tailor fees to specific transaction types, reduce double-counting, or waive fees, all without amending the primary statute. The Act defines an index number by reference to the ABS Consumer Price Index (All Groups, weighted average of eight capital cities). This is a standard index but may not reflect property market inflation in specific regions. The Act extends to every external Territory (section 3), so fees apply to actions involving Norfolk Island, Christmas Island, the Cocos Islands, and others.

The Act directly affects any person who is liable to pay a fee under Part 6 or Part 6A of the Foreign Acquisitions and Takeovers Act 1975. That includes foreign persons making acquisitions of interests in Australian land, securities, or assets that trigger notification or approval requirements under the principal Act. Part 6 covers fees for actions such as acquisitions that require approval or are subject to an exemption certificate. Part 6A covers vacancy fees on foreign-owned residential land that is not occupied or available for rent. The fee is imposed on the foreign person or entity responsible for the action. Joint and several liability is contemplated by the note to subsection 6(2)(f)(ii), which allows a reduction to nil if another joint debtor pays. The fee regime also affects Australian businesses with foreign ownership, including widely held listed companies that may be considered foreign under the aggregation rules. Trustees, partnerships, and unincorporated associations are also within scope if the underlying Act captures them. The $7,000,000 cap and its indexation primarily benefit acquirers of very high-value assets, because the fee can never exceed that amount regardless of transaction size. For smaller transactions, the fee may be a significant proportion of the investment. The ability to set different amounts for different kinds of persons or circumstances under paragraph 6(2)(b) means the government can discriminate between, for example, private foreign investors and sovereign wealth funds, or between residential and commercial acquisitions. The Act also affects professional advisers, lawyers, and accountants who must calculate and ensure payment of the correct fee. The compliance burden falls disproportionately on foreign investors unfamiliar with Australian regulatory processes. The Act does not impose any obligation on Australian citizens or residents unless they are acting as agents for foreign persons or are jointly liable.

The principal duty imposed by this Act is the obligation to pay a fee determined under the regulations when a liability arises under Part 6 or Part 6A of the Foreign Acquisitions Act. The fee is imposed as a tax, so payment is mandatory and not contingent on receiving a service. The person liable must ascertain the correct amount by reviewing the regulations, which may include indexation adjustments, multiplier factors, or other methods not specified in this Act. The only statutory right conferred on the liable person is the right to have the fee not exceed the capped amount ($7,000,000 as at commencement, indexed from July 2024). That cap provides an upper bound but does not guarantee any lower limit. The regulations may specify a nil amount for certain fees, which effectively waives the duty. The Act also grants a right to the reduction or replacement of a fee if circumstances change after it becomes payable, but only if the regulations provide for such a mechanism (subsection 6(2)(f)). Similarly, if two or more fees are payable in relation to a single agreement, the regulations may specify a method to reduce the total burden, but the Act does not require that this be done. The government has the right to impose and collect the fee as a tax, and to prescribe different fee regimes for different categories of persons and actions. The government also has the right to index the cap annually using the CPI factor, but this can only increase the cap, not decrease it (subsection 7(3) ensures the indexed amount is not less than the previous year’s amount). The liable person has no statutory right to a refund if the fee is later found to be excessive, unless the regulations provide for a replacement amount. The Act does not create any right of review, appeal, or objection; those would have to arise under the principal Act or general administrative law.

This Act does not itself create penalties for non-payment of the fee. It imposes the fee as a tax, and subsequent enforcement would be governed by the Foreign Acquisitions Act and possibly the Taxation Administration Act 1953 if the fee is treated as a tax-related liability. Section 5 does not specify that the tax is imposed under the Commonwealth’s taxation power, but the characterisation as a tax means the usual protections and remedies associated with taxation law apply, including the possibility of garnishee notices, recovery through the Federal Court, and penalties for failure to pay. Under the principal Act, failure to obtain approval before an acquisition can result in civil penalties, divestment orders, and criminal penalties in serious cases. Non-payment of the fee itself may be treated as a separate contravention if the regulations require payment as a condition of approval or by a due date. The Act provides no ability for the government to waive or remit the fee except as the regulations allow. The cap of $7,000,000 is a maximum, so exceeding it would be invalid; a fee imposed above the cap would be ultra vires and could be challenged. The indexation provisions under section 7 are automatic: the Treasurer does not have discretion to suspend indexation or adjust it for economic conditions. The use of a CPI-based factor means the cap will increase with inflation, but the rounding provision (down to nearest $100) and the floor provision (not less than previous year) prevent arbitrary reductions. Enforcement is likely to be proactive: the Foreign Investment Review Board (FIRB) reviews applications and requires payment before processing, effectively creating a pay-to-play system. Failure to pay is likely to stall an application or result in a notice of breach. The Act does not mention criminal liability for underpayment or late payment, but the principal Act may impose strict liability for inaccurate statements.

This Act operates in conjunction with the Foreign Acquisitions and Takeovers Act 1975 and the Foreign Acquisitions and Takeovers Regulation 2015. It does not replace them; it merely imposes the fees as a tax. The fee amounts are set by regulations made under this Act, not under the principal Act. The definition section (section 4) incorporates definitions from the principal Act and its regulations, so terms such as “foreign person”, “action”, “residential land”, and “vacancy fee” have the same meaning. This ensures consistency between the fee regime and the underlying substantive rules. The Act also interacts with the Taxation Administration Act 1953 if the fee is treated as a tax: the Commissioner of Taxation may be involved in collection, and the Taxpayers’ Charter may apply. However, the Act does not explicitly extend the provisions of the Taxation Administration Act, so uncertainty remains. For constitutional purposes, the imposition as a tax means the Commonwealth can rely on section 51(ii) of the Constitution (taxation power), rather than the corporations power or external affairs power, which underpin parts of the principal Act. This could be significant if a challenge to a specific fee amount is made: the test for a tax is different from a fee for service, and the Act must not be a disguise for a penalty or a charge for a non-governmental purpose. The Act also interacts with the general law of contract and property: if a fee is unpaid, the underlying acquisition may still be valid, but the Commonwealth could sue for the debt or impose penalties under the principal Act. State and territory stamp duty regimes are unaffected, but the Commonwealth fee is an additional cost on foreign investment. The regulations may provide for reductions if a fee is paid on a similar action under another Commonwealth law, but that is not mandated by the Act itself.

The Act was originally assented to on 25 November 2015 and commenced on 1 December 2015 for the operative sections (5 to 13), with sections 1 to 4 commencing on Royal Assent. The source text provided contains no subsequent amendments. The only amendment visible in the text is the addition of indexation provisions for the fee cap from 1 July 2024 (section 7). As originally enacted, there was likely no indexation clause; the current version shows indexation is effective from 1 July 2024. The Act as supplied is presumably the compiled version as at the time of the user’s request. It is important to note that the Act does not set out amendment histories in the text; the table under section 2 only covers original commencement. Any later amendments would require separate legislative instruments. The regulations made under section 6 may have been amended numerous times to adjust fee amounts, but those are not part of this Act. The lack of primary amendment history suggests the core structure has remained stable, with the fee schedule being the dynamic element. The indexation factor formula in section 8 uses a base year “the financial year before the financial year in which this subsection commences”. The subsection 8(1) commenced on 1 December 2015, so the base year is the year ending 31 March 2015. That base will never change, ensuring consistency over time.

The source text contains no references to any litigation under this Act. No cases are cited. Given that the Act is a short imposition statute with limited operative content, it is unlikely to have generated significant case law directly. Most disputes are more likely to arise under the principal Act (Foreign Acquisitions and Takeovers Act 1975) or under administrative law challenges to fee decisions. A litigant might challenge the validity of a fee regulation on the ground that it exceeds the $7,000,000 cap or that the characterisation as a tax is invalid because the fee is not truly a tax. There could also be disputes over whether a particular amount was correctly indexed or whether the indexation factor was miscalculated. The absence of recorded litigation in the source does not mean no cases have been decided; it simply means the source does not include them. Practitioners should be aware that this Act is rarely litigated on its own; it is typically part of a broader dispute about a foreign acquisition. The cap amount itself could be subject to constitutional challenge if it is argued that the tax is so high as to be confiscatory or that it exceeds the Commonwealth’s power to tax foreign investment. However, no such challenge is recorded in the primary material.

Several features of this Act can catch practitioners off guard. First, the fee is imposed as a tax. This means it is not negotiable and not a fee for service. The government is not required to provide a proportional service; the amount may be set arbitrarily high within the cap. This characterisation also may preclude claims for refund if an application is withdrawn or refused, unless the regulations specifically allow it. Second, the only statutory limit is $7,000,000, but that cap is now indexed from 1 July 2024. The indexation factor uses CPI, not property price growth. In a period of low inflation the cap may not increase much, but in a high inflation environment it could rise significantly. The rounding down to the nearest $100 is favourable to the payer, but the floor provision (subsection 7(3)) ensures it never decreases, so the cap ratchets upward. Third, the Act contains no transitional provisions for fee changes; if the regulations are amended, a person may become liable for a higher fee partway through an application process. The regulations may specify methods for replacement amounts, but there is no guarantee. Fourth, the definition of “this Act” includes the regulations (section 4). This means that references to “this Act” throughout include the regulations, so any obligation or power expressed in relation to “this Act” automatically applies to the regulations. This is a drafting oddity that can cause confusion; it means the regulations are effectively treated as part of the Act for most purposes. Fifth, the Act does not specify who must pay the fee in the case of joint acquisitions. The principal Act’s definitions will control, but joint and several liability is only hinted at in the note to subsection 6(2)(f). A foreign investor who is only one of several acquirers may be liable for the entire fee. Sixth, the vacancy fee regime under Part 6A is separate; the Act imposes those fees as a tax as well, so they are not optional. Seventh, the regulations may specify a nil amount, but relying on that without confirming the regulations is risky.

Compliance begins with identifying whether you are a foreign person undertaking an action that triggers a fee under Part 6 or Part 6A of the Foreign Acquisitions Act. The first step is to read the principal Act and its regulations to determine if an action (acquisition of an interest in land, securities, or assets) requires notification or approval. If it does, a fee will be payable. The fee amount is not in this Act; you must locate the current Foreign Acquisitions and Takeovers Fees Imposition Regulation 2015 (or any successor regulation). The regulations set out the fee schedule for each type of action, including different fees for residential land, commercial land, agricultural land, and businesses. They may also include indexation provisions or fixed amounts. If the fee is not listed or is unclear, the cap of $7,000,000 (indexed) is the outer limit, but the actual fee is likely far lower for most transactions. You must pay the fee at the time specified in the regulations, often when lodging an application or notice with the Foreign Investment Review Board. Non-payment will delay processing and may lead to penalties under the principal Act. Keep records of payment and the calculation method. If you are jointly liable with others, ensure at least one party pays; the regulations may allow a reduction if another joint debtor pays, but do not count on it. Monitor indexation: the cap is indexed annually from 1 July 2024, so the maximum fee may increase each year. If a fee is expressed as a fixed amount in the regulations, check if those amounts are also indexed or updated. For vacancy fees, the obligation is ongoing; ensure the property is not vacant for more than six months in a year, otherwise a fee may be imposed. If the circumstance giving rise to the fee changes after payment (e.g., the acquisition does not proceed), check the regulations for a possible replacement amount. Finally, seek professional advice tailored to the specific transaction; the cost of getting the fee wrong (underpayment, late payment) can exceed the fee itself due to penalties and reputational damage with FIRB.