The Australian government appears to be stepping up its campaign to deal with the unchecked acquisition of domestic property by foreign investors.
The Australian Tax Office (ATO) plans to closely scrutinise a network of “high risk” real estate advisers as part of an audit into dubious acquisitions of domestic property by foreign investors.
According to sources cited by Fairfax, the ATO has employed huge data banks and sophisticated risk screening techniques to identify a small network of professional advisers who are consistently involved with high-risk investment behaviour.
Some of the advisers are already well known to the ATO due to past allegations of money laundering or involvement with organised crime, while most have already been included in the department’s previous tax audits.
The advisers are reportedly individuals hailing from the uppermost echelons of Australia’s professional services sphere, and include a member of a big four accounting firm as well as a member of a leading legal consultancy.
The ATO audit has been launched at the behest of treasurer Joe Hockey and parliamentary secretary to the Treasurer Kelly O’Dwyer, in response to findings that the Foreign Investment Review Board and the Department of Treasury possessed insufficient resources to deal with the issue of dubious foreign investment.
The federal budget from last month has allocated a further $37.2 million to the audit over a four-year period.
The audit is part of broader efforts to crack down on irregular acquisitions of Australian real estate by overseas nationals as concerns mount over the impact large-scale foreign investment upon the domestic property market and housing affordability.
Measures include the unveiling of a hefty tax on foreign investment in Victorian real estate by the Andrew government, as well as calls from FIRB chairman Brian Wilson to establish a national register for monitoring property transactions involving overseas nationals.
Toward the end of last year, FIRB came under fire from Kelly O’Dwyer for its failure to properly enforce laws concerning real estate investment by foreigners during a federal inquiry into housing affordability.
The advisers targeted by the ATO are believed to have exploited this lax enforcement to facilitate high-risk investment behaviour.
A major example is the recent purchase of a $52 million Sydney Harbour waterfront home by Chinese tycoon Wang Zhijun, which was made without first obtaining FIRB approval after a leading law firm advised Wang that he could dodge the requirement by employing a family trust structure for the transaction.