Vijay Balasubramaniyan, a residential real estate buyer, has been penalised $250,000 after he was found to have purchased multiple properties in outer Melbourne without being authorised to do so by the Foreign Investment Review Board (FIRB), which is administered by the Australian Treasury and the Australian Taxation Office.
The ATO filed proceedings in relation to six breaches of the Foreign Acquisitions and Takeover Act 1975 (FATA) by Mr Balasubramaniyan in July 2020, following an investigation that found he had purchased four properties without permission while simultaneously owning two established properties.
ATO assistant commissioner Keir Cornish welcomed the penalty decision, saying it would serve as “a clear deterrent to other foreign investors who believe they can operate outside of the law”.
“There are obligations under Australian law for foreigners that have invested in, or plan to invest in Australian residential real estate. The ATO promotes voluntary compliance of the rules by foreign persons, but where foreign investors resist compliance action, stronger enforcement action is taken,” Mr Cornish said.
Australia’s foreign investment rules limit the type of residential property that non-residents can purchase.
New compliance and enforcement powers that came into effect in January 2021 dramatically increased the penalties and action FIRB is able to take for non-compliance with the FATA.
Foreign individuals found to be in breach of the FATA can be penalised up to 25 per cent of the value of the property or have their capital gains recaptured, whichever is greater.
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.