At a time when the economic fortunes of Australia are dwindling under a commodity price collapse, would you expect our politicians to be holding up billions of investment dollars?
In recent years, the Australian (and State) Governments have been luring migrants with a Significant Investor Visa (SIV) program. It requires applicants to invest $5 million into complying investments for four years before being allowed to apply for a permanent visa. Unlike other pathways to residency, SIV applicants do not have to satisfy an innovation points test nor be concerned about upper age limits.
Whilst it sounds simple enough, like most countries, the Government still has rules around an application. Kathleen Conroy Partner and Migration Specialist at Gadens Lawyers says that it is vital that an applicant provide true and accurate information in a visa application. “The giving of bogus documents, or false or misleading information can see an applicant become the subject of a ban with respect to future visa applications”. Conroy adds that a typical application can take anywhere from 6-12mths depending on documentation.
A measure of success
Since the program began in 2012 the Government has received 1,679 applications resulting in 751 visa’s being issued. Which (as of March this year), has resulted in $3.8 billion being invested into the Australian economy through complying investments with a further $2.8 billion proposed to be invested.
Victoria has benefited the most from this program with 428 visa issued to residents now residing there, followed by NSW with 245 with Queensland only receiving 38. 90% of applicants mostly from China.
The Significant Investor Visa program is in the process of being altered. One significant part of the changes includes reforming the rules about complying investments. Conroy says the Government instigated a review on October 14 2014 along with an announcement of a Premium Investment Visa with a $15m threshold. PIV applicants would be invited by Austrade, and based on business skill (years/growth/size) with investments aligned to our national interest. While the investment requirements will not have the same minimum requirements in venture capital and micro-cap funds, the investments will still exclude residential real estate, ‘loan back’ and must be FIRB compliant.
The lack of clarity around complying investments since October has halted billions of dollars being invested.
Conroy believes they will remove Government bonds off the list in favour of more economically beneficial investments. “The way the complying investment rules were originally set meant most applicants just bought government bonds, and the funds haven’t trickled in to the broader economy, missing one of the key reasons the Government wanted to accept these applicants”.
As a result, the Federal Government has now suspended all applications under the old program. The Government is keen to ensure that the program is improved by making it more attractive to investors as well as ensuring that money invested creates real benefits for the economy.
New Investment
Conroy says it is likely that the investors on these visa’s will be required to split their investments into specific sectors or types on investments. This would include minimum investments in venture capital funds of around $1m per investor. A similar requirement would exist for small or micro-cap companies. The remaining funds can be invested ‘balancing investments’ which would likely include things such as corporate bonds, exchange listed companies, Australia friendly society insurance bonds, commercial and industrial property (but not residential).
These reforms will hopefully increase the success of the Significant Investor Program. These funds will provide significant opportunities to Sophisticated Investors in providing investment partners with access to substantial funds and global knowledge and experience. While the Government is still to release the final details of the program, billions of dollars of investment remain in limbo which is dampening the effort to create positive reform.
Investors are only going to commit their funds if they have certainty about the roadmap to living in Australia. Without clear rules there is no opportunity for Sophisticated Investors to work with these overseas partners.
Kathleen Conroy is a Partner at Gadens Lawyers and is a registered migration agent: MARN 1170534.
In her migration practice, Kathleen has worked for large institutional clients, small business owners, overseas entities wanting to establish a business presence in Australia, and visa applicants.
For more visit Gadens Lawyers.
