Commonwealth Numbered Regulations - Explanatory Statements
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FOREIGN ACQUISITIONS AND TAKEOVERS AMENDMENT REGULATIONS 2011 (NO. 1) (SLI NO 275 OF 2011)
EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 275
Issued by authority of the Deputy Prime Minister and Treasurer
Foreign Acquisitions and Takeovers Act 1975
Foreign Acquisitions and Takeovers Amendment Regulations 2011 (No. 1)
The Foreign Acquisitions and Takeovers Act 1975 (the Act) provides the legislative framework for Australia's foreign investment screening regime.
Section 39 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act allows the Treasurer or his delegate - usually the Assistant Treasurer - to review investment proposals to decide if they are contrary to Australia's national interest. The Treasurer can block proposals that are contrary to the national interest or apply conditions to the way proposals are implemented to ensure they are not contrary to the national interest.
Section 26A makes it compulsory for foreign persons to notify the Treasurer before acquiring an 'interest in Australian urban land'. Section 5 defines 'Australian urban land'. This definition encompasses non-residential developed commercial real estate. Section 12A defines what is meant by an 'interest in Australian urban land.' Subsection 12A(8) allows regulations to be made to exempt certain acquisitions of interests in Australian urban land from the application of the Act.
The Foreign Acquisitions and Takeovers Regulations 1989 (the Principal Regulations) generally establish classes of exemptions. Regulation 3 of the Principal Regulations lists those acquisitions of an interest in Australian urban land that are exempt from notification under the Act. Regulation 13 sets out a formula for indexing particular thresholds on an annual basis. This formula is based on the proportionate increase in the GDP implicit price deflator against the previous year.
Sub-subparagraph 3(p)(ii)(C) of the Principal Regulations specifies a threshold amount under which an exemption from notification of an acquisition under the Act, of an interest in non-residential commercial land or land that comprises of specified accommodation facilities, and is not vacant, applies. This threshold amount does not apply to acquisitions by prescribed investors or to heritage listed real estate.
The purpose of the Amendment Regulations was to amend the Principal Regulations for the purpose of indexing the threshold of $50 million contained in sub-subparagraph 3(p)(ii)(C), using the formula contained in regulation 13. This indexation applies for calendar years later than 2011.
The Amendment Regulations implemented the Government's response to Recommendation 3.1 of the Productivity Commission's fifth Annual Review of Regulatory Burdens on Business, which was released on 13 September 2011.
The amendment to regulation 13 was a minor technical change to correct a reference in sub-regulation 13(2) within the definition of the GDP implicit price deflator value, to a table published by Australian Bureau of Statistics.
Further details of the Amendment Regulations are contained in Attachment A.
The Amendment Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003 (the Legislative Instruments Act).
In relation to Part 3 (Consultation Before Making Amendments) of the Legislative Instruments Act, the Productivity Commission undertook extensive consultation with the business and consumer services sector when preparing its fifth Annual Review of Regulatory Burdens on Business. In addition, the amendments were minor in nature.
The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments.
Attachment A
Details of the Foreign Acquisitions and Takeovers Amendment Regulations 2011 (No. 1)
Regulation 1 - Name of Regulations
This regulation provides that the title of the Regulations is the Foreign Acquisitions and Takeovers Amendment Regulations 2011 (No. 1).
Regulation 2 - Commencement
This regulation provides that the amended Regulations commence on the day after they are registered.
Regulation 3 - Amendment of Foreign Acquisitions and Takeovers Regulations 1989
This regulation provides that the Foreign Acquisitions and Takeovers Regulations 1989 (the Principal Regulations) are amended as set out in Schedule 1.
Schedule 1 - Amendment of Foreign Acquisitions and Takeovers Regulations 1989
Item [1] - Sub-subparagraph 3(p)(ii)(C)
Sub-paragraph 3(p)(ii) of the Principal Regulations provides that acquisitions involving non-residential commercial land or land that comprises of specified accommodation facilities, do not need to be notified where the land is valued below an applicable specified monetary threshold and is not vacant. Three thresholds are provided in this regard. The first threshold contained in sub-subparagraph 3(p)(ii)(A) pertains to acquisitions by prescribed foreign investors. The second threshold contained in sub-sub-paragraph 3(p)(ii)(B) pertains to heritage listed real estate. The third threshold contained in sub-subparagraph 3(p)(iii)(C) applies in any other case (the general threshold).
Regulation 13 sets out a formula for indexing particular thresholds on a calendar year basis, which is based on the proportionate increase in the GDP implicit price deflator against the previous year.
Item 1 substitutes a revised sub-subparagraph 3(p)(ii)(C) of regulation 3 with the effect that the general threshold amount of $50 million is indexed using the formula in regulation 13 for any calendar year later than 2011.
Item [2] - Subregulation 13 (2), definition of GDP implicit price deflator value
This item omits the reference to Table 7 and inserts a reference to Table 8 in order to correct a reference to the location of the GDP implicit price deflator value published by the Australian Bureau of Statistics in the publication Australian System of National Accounts (cat. 5204.0).
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