Mortgage brokers and real estate agents who help overseas buyers flout foreign investment rules will face severe penalties under a tougher compliance regime.
The federal government has responded to a parliamentary report into foreign investment in residential real estate by promising new measures to better detect rule-breakers.
Foreign investors are generally limited to purchasing off-the-plan properties. New measures are designed to make it easier to detect those who purchase established properties – as well as the agents who help them.
The government has proposed to introduce civil penalties for mortgage brokers, property buyers, real estate agents and other third parties who “knowingly assist foreign investors to breach foreign investment rules”.
“Provisions currently exist under the criminal code for knowingly assisting another person to commit a criminal offence,” the government said.
“Tougher penalties together with the increased compliance and enforcement regime will help deter non-compliance with Australia’s foreign investment rules.”
Treasurer Joe Hockey revealed on budget night in May that the maximum civil penalty would be increased to three years’ imprisonment or a $135,000 fine.
The maximum civil penalty was also increased to either the capital gain or 25 per cent of the value of the property – whichever is greater.
Supervisory responsibilities will be transferred to the ATO, the government confirmed yesterday.
The ATO will use its “sophisticated data-matching systems” to detect rogue foreign investors and agents, as well as its “experience in pursuing court action” to punish them.
The government has proposed to amend legislation to allow for greater sharing of data between the ATO and other regulatory and law enforcement agencies.
It also revealed that it is working with the states and territories to establish a foreign ownership register of land, which is designed to better monitor foreign investment.
“Once the state-based data collections are established, these will replace information sourced directly from property owners,” according to the government.
“Once established, the register will provide essential information to assist government to better understand foreign investment trends and aid in the detection of non-compliance with the foreign investment rules.”