Huge new fees revealed for foreign investors applying to buy Aussie farmland

Foreign investors are now being slugged hundreds of thousands of dollars in fees to apply to purchase Australian farmland — a whopping 500 per cent increase on pre-pandemic rates.

Foreign investors have been hit with huge fee increases when applying to buy Australian farmland. Picture: Larundel Estate at Cargerie when is owned by the Ruyi Group.

Foreign investors are being slugged more than $600,000 in fees to apply to purchase Australian farmland – a whopping 500 per cent increase on pre-pandemic rates.

The Foreign Investment Review Board has upped its application fees in the past week with foreigners applying to purchase properties valued at more than $80m now having to fork out up to $628,750 in what rural property experts say is a “cash grab”.

In 2019, the FIRB charged buyers $105,200 in fees when applying to purchase properties worth more than $10m. The new fees will now see foreigners hit with an application fee of up to $503,000 and a further $125,750 for a national security review for properties worth more than $80m.

Application fees for farmland worth $10m or less are now up to $63,500 while fees for farmland worth $8m or less are up to $47,625 and up to $31,750 for properties worth $6m or less. In 2019, the FIRB charged fees of $26,200 for farmland valued at $2m-$10m and $2000 for values less than $2m.

The new fees came into effect on July 1 and are not refundable for investors whose applications are not approved by the FIRB.

National Farmers’ Federation vice president David Jochinke said the fee structure seemed “exorbitant”.
“I would hope that it is only a cost-recovery mechanism but at that figure, as a farmer, I don’t think we are seeing the benefits in terms of the reporting (on foreign farm sales) that was promised by FIRB,” Mr Jochinke said.

“It is hard to know why the cost is so high. As people selling into the market we want to know if we’re getting value and appropriate oversight.”
Danny Thomas, senior director of specialist rural property agency LAWD, likened the fee to a tax and said vendors weren’t seeing any benefit from the fees.

“If there was a more timely response from FIRB with applications maybe there would be more acceptance of the increase but their approvals are still so slow,” Mr Thomas said.

“This doesn’t just impact the buyer but also the vendor.

“You can’t keep increasing fees and changing the rules and expecting investors to just keep fitting in.”

There have been numerous transactions involving foreigners in the past six months that have exceeded the maximum $80m threshold, including the $500m-plus sale of NSW cotton giant Auscott Limited to Canada’s PSP Investments and the $100m sale of the Duddy family’s South Calandoon property at Goondiwindi in Queensland to the UK-based hedge fund manager Sir Michael Hintze.

Colliers International head of agribusiness Rawdon Briggs said while he was understanding of application fees, the increase showed it was now quite clearly a tax.

Elders’ real estate general manager Tom Russo said: “I don’t think linking a fee to value is the way to do it. If you are pro investment why impose a tax, or additional burdens, on investors?”

But Mr Russo said he didn’t believe the increased fee would have an impact on foreign investors’ appetite for Australian farmland.

“Buying land in Australia is such a low risk so it won’t deter foreign buyers but it will be an additional cost they will have to factor in, which could give Australian buyers a competitive advantage,” he said.

CBRE agribusiness director Phil Schell said he was yet to see the increased application fee having an impact on sales.

“It hasn’t slowed things down yet, confidence in the market here is still full on,” Mr Schell said.

The Australian Taxation Office’s latest annual report shows last year it collected $94 million in foreign investment fees – including agricultural, residential and commercial land.

Treasurer Josh Frydenberg said the foreign investment fee framework ensures that foreign investors, not Australian taxpayers, carry the cost of administering Australia’s foreign investment framework.

“Changes to the fee structure, introduced on 1 January 2021, were made to ensure that our foreign investment framework keeps pace with emerging risks and global developments, including similar changes to foreign investment regimes in comparable countries. Generally, foreign acquisition fees represent a small proportion of the costs associated with an investment,” Mr Frydenberg said.

“The national security powers that came into effect on 1 January 2021, and the associated fee structure, are an important feature of Australia’s foreign investment framework.”

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