Domain.com.au – 9 June, 2015
By Lucy Macken and John Garnaut
Tax investigators have tracked down dozens of foreigners who have sidestepped investment laws to buy real estate in Australia, with one foreign investor being allegedly caught with 10 properties.
Treasurer Joe Hockey announced early results of a new Australian Tax Office probe on Tuesday amid growing concerns that foreigners may be inflating house prices by buying without the necessary approval from the Foreign Investment Review Board.
It comes days after a Fairfax investigation revealed that a Chinese property developer, Wang Zhijun, concealed his identity behind an elderly Melbourne couple to buy one of the country’s most famous homes, Altona, at Sydney’s Point Piper for $52 million.
Fairfax understands Altona is one of the 195 homes that Mr Hockey said yesterday were under investigation by the tax office.
The ATO audit is in its early days, after receiving $37.2 million over four years in new funding in last month’s budget, but it has already led to acute discomfort among advisers and real estate agents who deal with the high-end markets of Sydney and Melbourne.
More than 60 investigators are being deployed to scour the tax office’s databases and areas of likely risk after FIRB proved unable to enforce or investigate foreign investment laws as they apply to real estate.
Foreigners are required to receive FIRB approval before buying established homes but they are free to invest in new housing developments.
Mr Hockey’s office said of the 195 cases under scrutiny, 40 came to light as a result of Australians snitching on their neighbours, and 24 cases are from foreign investors voluntarily admitting to a possible breach of the rules.
The value of the properties under scrutiny range from the prestige market to the suburbs of our capital cities.
The briefing also confirms speculation that there is a second divestment order expected to be made over a Perth property after an investor from the United Kingdom admitted their $700,000 purchase was likely against the rules.
In March, Mr Hockey forced Chinese billionaire property developer Xu Jiayin to forcibly sell his $39 million Point Piper mansion Villa del Mare because it was purchased in contravention to the foreign investment rules.
Figures from Treasury show there were 88,000 established homes owned by temporary residents as of March, of which NSW accounts for 26 per cent.
Victoria follows close behind with 25 per cent of those homes owned by temporary visa-holders.
Western Australia usually lags behind NSW, Victoria and Queensland in terms of foreign investment, but accounts for 22 per cent of the established housing market for temporary residents.
Queensland accounts for 19 per cent of established dwellings owned by temporary residents, followed by South Australia with 4 per cent, the ACT with 1.5 per cent, Tasmania with 1.1 per cent and Northern Territory with 0.2 per cent.
Temporary residents are allowed to buy one established dwelling to live in, but are required to sell it when their visa expires or the property is no longer their primary residence.