Senate Economics Legislation Committee, , 1:03:31 to 1:10:26
The ATO provides data on infringement notices and compliance audits for foreign investment in residential real estate, noting a significant decrease in applications following fee increases.
Topics: Infrastructure, Procurement
Speakers: Jennifer Moltisanti, Senator Fatima Payman, Chris Tinning, Katrina Di Marco, Unknown Speaker, Senator Lisa Darmanin
Senator, the ATO administers the uh residential real estate. So I think I've got an ATO colleague here who can provide you with further details. The Treasury infringement notices don't relate to residential real estate, they relate to commercial investments.
Okay, is your colleague here to provide us?
Jennifer Moltisanti Assistant Commissioner, uh foreign investment programme, Australian Taxation Office. So could you just repeat the question?
So my question's around how many um infringement notices relating to foreign purchase of established dwellings there were and what was the total value of those infringement notices? Because I understand there was 18 that were issued.
So Senator, in 2425, there were 1,017 purchases of established dwellings by foreign persons, and this is only 0.19% of all purchases of dwelling, and that excludes vacant land across Australia. So from an infringement notice. I'm just checking if I have the data on that. I may need to take that on notice, Senator, if I may?
Um and just a point of clarification, these can take that on notice, actually, that would be great.
Um we might be able to come back to you on that during the ATO session as well. So we'll try and come back to you within within estimates rather than taking on notice if that's okay.
Yeah, absolutely.
Thank you. Because the ATO's foreign investment infringement notices 2025 to 26 on average had a value of about $37,000. Um this would be loose change for individuals who are purchasing Australian property. Um we know how crazy the market is. Have these notices been effective at deterring non-compliance? And have there been any instances of repeat offending?
Uh I'll need to take that one on notice as well for this evening.
Thank you. Um Treasury and the ATO were funded to oversee compliance with the foreign uh housing investment ban. Has this funding been adequate? Um, and to what extent, if at all, does Treasury believe anything has slipped through the net?
Yeah, uh so Treasury was given funding for looking at land banking by foreign investors in the commercial real estate space. We've done a comprehensive audit and issued infringement notices in relation to some non-compliance in relation to commercial real estate, and though I think ATO has done a lot of work in the real residential real estate space.
So the funding you've received is adequate in your sound, if I may, the ATO is undertaking a comprehensive audit over two years of all foreign investment approvals that require development of residential land. So we are working um through that and we expect to have an interim um report um by um November. But largely speaking, um we have found um our reviews that um most are compliant. But there has been some remedial action.
Um details of what remedial action was taken?
I will take that on notice.
Thank you. Um in February I also asked a question about the effect the ban has had on housing supply, to which Treasury responded, and I quote, the temporary ban on foreign purchases of established dwellings enables Australians to buy homes that would have otherwise been bought by foreign investors while retaining incentives for foreign investors to contribute to new housing supply. End quote. Feel like that was another non-answer. Uh does Treasury have any actual data on the effect that the ban has had on housing supply? Or is it or is the effects effect so small that you just simply can't quantify it?
Senator, if I may, um I suppose there are two points to make here. Firstly, only a very small um proportion of Australian residential dwellings, and this is the new and established a purchase by foreign persons in 2425. Half a percent of purchases of residential dwellings were made by foreign persons as defined under the um FADA. Um, and the overall purchases were um in excess of 540,000. Now, unpublished data um breaks down um the uh approvals um by property type, and it indicates that approximately seven there's been an approximate 77% decrease in applications for established dwellings between the 23-24 and 24-25 years. Now, this decrease is likely attributed to the ban commencing on the 1st of April 2025, and also the tripling of established dwelling application fees in April 24. So there are two factors that have contributed to that 77% decrease in applications.
Senator, in terms of the investment into new housing stock, there's very much incentives for investors to invest in housing stock. There are much lower fees for investments into new housing stock than there are for purchases of existing dwellings, and um those fees uh and the sort of um clarification that uh any uh investment on residential land designed to increase the housing stock is subject to commercial real estate um rates, not the residential rates.
Do we have data on how much housing supply is increased?
We can certainly give you data on the investment uh volume into um new housing.
New housing supply.
Yes, Senator.
Just in terms of investment that comes through us.
And just to add to that, Senator, we can we can give you the data we have, that's that's no problem. But all of these measures are announced as complements to a range of other policies in place around new housing supply. So I think as Ms. Moltisanti talked through, the numbers of um foreign persons purchasing established dwellings has always been reasonably small and reasonably modest in the scale of the overall Australian housing market. The band was designed. To complement a range of other measures around housing supply. So obviously Mr. Tinning can give you the data that we have, and we're very happy to sort of take that on notice. And if we can come back later in the committee, we will do so. But it's not usual that we would try and quantify the impact of these sorts of measures individually on overall housing supply. Treasury would tend to consider these in the suite of the overall reforms that the government has.
Thank you. I'm going to have to rotate the call. Senator Bragg.