Sydney and Melbourne property markets have been running hot of late. Auction numbers for NSW and Victoria for the week ending 1st November were 1,361 and 611 respectively with clearance rates of around 64% and 65%.
Part of the reason for this is the huge demand by foreign investors. The latest ANZ Property Council report indicates that around 26% of residential property sales in NSW and 30% in Victoria in the last three months were to foreign investors. Wow!
In some cases, foreign investors have breached Australia’s foreign investment rules when purchasing these properties.
The ATO is administering a reduced penalty period on behalf of the Foreign Investment Review Board for foreign investors who disclose possible breaches of these rules.
If a voluntary disclosure is made, the foreign investor may be given 12 months to divest themselves of the property (rather than a shorter period) and may not be referred for criminal prosecution.
Foreign investors have until 30th November 2015 to make voluntary disclosures before new criminal and civil penalties apply from 1st December.
If you are affected by this or have clients who are affected, it is important to seek advice now before the reduced penalty period ends.
Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.