FIRB application fees to double 12 months after 500 per cent increase in price recorded

Industry experts have warned the doubling of FIRB application fees could tell global investors they are not welcome in Australia.

Industry leaders have slammed the federal government’s decision to double the Foreign Investment Review Board application fees later this month.

Foreign investors wanting to buy Australian farmland will have to pay twice as much in application fees from July 29, which the government expects to generate an extra $455 million in budget revenue over the forward estimates.

FIRB application fees for agricultural land currently start at $6600 for acquisitions of $2 million or less, increasing to a maximum of $522,500 for purchases of more than $80 million.

But from next Friday foreign investors can expect to pay $13,200 for acquisitions of $2 million or less, increasing to a maximum of $1,045,000 for purchases of more than $80 million.

For potential purchases greater than $80 million, foreign investors will also face a national security review fee of $261,250 up from $130,625 in 2021-22.

This means for potential transactions greater than $80 million, foreign investors could be charged at least $1.3 million in fees.

LAWD senior director Danny Thomas criticised the move.

The 211,664ha Bellevue Station on the Mitchell River near Chillagoe was sold to an American buyer for a reported $40 million in 2021. The sale was subject to FIRB approval.

“This is senseless tax grab which serves to erode foreign investor confidence,” he said.

“It makes no sense to me.

“If the government are fair dinkum about $100 billion of agricultural production by 2030 we need capital investment to develop land.”

Mr Thomas said he had discussions today with two clients about who were assessing future acquisitions.

Elders Real Estate general manager Tom Russo said the size of the changes following a significant increases in recent years was a surprise.

“What is clear is that such a significant increase is sending the wrong message to global investors that they are not welcome here,” he said.

“If we are to achieve our national agricultural production goals, massive investment is required.

Yarrabee Park in NSW was purchase by Canada’s PSP Investments for about $60m-plus earlier this year.

“The reality is that these fees, like other government imposed transaction levies, are factored into the investors bid price and ultimately taken out of the pocket of the asset owner who, in the vast majority of cases, are Australians.

“The government has stated that this increases was announced as part of its election policy, but my understanding is that this was in the context of housing markets.

“The scope of the increase is too wide and it seems improper to be taxing agricultural asset holders to fund housing affordability policy initiatives”

Between 2019 and 2021 under former treasurer Josh Frydenberg FIRB application fees increased by about 500 per cent compared to pre-pandemic levels.

In 2019, the FIRB charged buyers $105,200 in fees when applying to purchase properties worth more than $10 million. The 2021 fees saw foreigners hit with an application fee of up to $503,000.

Inglis Rural Property director Sam Triggs said the fee increases will handicap foreign investors.

“Basically it put internationals buyers at a disadvantage when comparing them with domestic buyers,” he said.

“In my opinion, offshore buyers are generally well capitalised and invest heavily in their farming enterprises along with management expertise, so a shame to discourage them with additional taxes.”

Meanwhile CBRE Agribusiness director David Goodfellow said more industry consultation was needed before similar types of decisions are made.

“Agriculture thrives when we collaborate with our foreign investment partners and we should genuinely continue to embrace their support to further develop our industry,” Mr Goodfellow said.

Mr Goodfellow said radical government decisions made without consultation can have a “huge impact on confidence within sectors”.

Federal treasurer Jim Chalmers said the government had increased the fees to address Australia’s budget deficit.

“Decisions like this are made necessary by the state of the Budget we have inherited from our predecessors,” he said in the statement.

“Australia welcomes foreign investment that is in Australia’s interests.

“Foreign investment application fees ensure the cost of administering the foreign investment framework is not borne by Australians, and penalties encourage compliance with our rules.”

Mr Chalmers also said the changes to foreign investment fees and penalties will assist the government’s housing reform agenda and deliver schemes such as the Help to Buy.

The government said they did not expect the changes to make it more difficult for foreign investors and they did not expect to see fewer international investments because of this fee increase.

The doubling of fees will apply from July 29, while FIRB penalties will need to be legislated when parliament returns.

In addition to FIRB application fees, screening thresholds have also been subject to government intervention in recent years.

In 2015 the FIRB threshold for foreign buyers of agricultural land reduced from $252 million to $15 million, and down to $55 million for investment in agribusiness.

Prior to this year’s election the Labor Party said they intended to keep the FIRB’s screening threshold steady at $15 million, despite opposition to the threshold almost seven years ago.