Changes impacting foreign beneficiary in inheriting Australian land
Since 1 January 2021, foreign persons who acquires an interest in Australian land by will, ceased to be exempt from the foreign investment laws. As result, foreign beneficiaries must obtain an approval from Foreign Investment Review Board to inherit an interest in Australian land in accordance with the will.
A ‘foreign person’ is a person who is not ordinarily resident in Australia and can include foreign nationals and Australian citizens living overseas. However, there are certain exemptions for Australian citizens living overseas if they can demonstrate close ties to Australia.
A foreign beneficiary is considered to have taken a notifiable action at the time at which the legal interest is acquired on completion of administration of the estate. This means the foreign beneficiary is expected to apply to the FIRB within 30 days. Penalties apply if there is a failure to give a relevant notice on time.
For a residential land at $1 million or less, the application fee is $6,600 (as at 4 November 2022) and increases to $13,200 if the residential land is $2 million or less, and so on. These fees are significant, and it is not guaranteed that FIRB approval would be granted to a foreign beneficiary to own an established residential dwelling. In that case, that dwelling may need to be sold by the executor or administrator and the net proceeds be paid to the foreign beneficiary instead.
Please contact our office for legal advice if you have made a gift of Australian property to a foreign beneficiary under your will.