The Government has announced today its "Industry Innovation and Competitiveness Agenda" that is designed to drive growth and jobs in key industries. A key part of the agenda is changes to the Significant Investor Visa programme (SIV).
The purpose of the SIV reforms is to encourage high net worth individuals to make Australia home and better direct additional foreign investment into Australia.
The proposed changes include:
- Streamlining and speeding up the processing of SIV applications;
- Aligning the criteria for eligible investments with the Government's national investment priorities and will be determined by Austrade in consultation with key economic and industry portfolios;
- The introduction of a Premium Investor Visa (PIV) that will provide a twelve month pathway to permanent residency for those meeting a $15 million threshold; and
- Austrade will become a nominating entity for SIV's (complementing State and Territory Governments).
The proposed changes will take effect in the current fiscal year and the PIV will be introduced from 1 July 2015.
Conclusion
The streamlining changes are welcomed and should improve the attractiveness of Australia for foreign investment.
The introduction of the PIV should also encourage foreign investment into Australia by offering a unique pathway to Australian residency. The additional foreign investment into strategic areas should ultimately assist with economic growth.
However, the benefits from a taxation perspective of SIV's should be compared to PIV's. Depending on the goals of the foreign investor, the SIV could still be more attractive than a PIV. The SIV requires a lower investment amount and the person is treated as a "temporary resident of Australia".
The advantage of being a "temporary resident of Australia" is that the person is only subject to tax on income earned from capital amounts invested in Australia and profit made from the sale of any Australian investments as compared to residents of Australia who are subject to tax on their worldwide income and capital gains.
The Treasurer will consult with industry to ensure that the draft legislation will deliver the intended outcome.
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