The federal government has asked the public to comment on a new options paper, which has proposed to increase compliance requirements for investors, developers and third parties, such as mortgage brokers and real estate agents.
This would be done by creating a specialised investigative and enforcement area within the Australian Taxation Office (ATO).
The ATO would be tasked with “using its sophisticated data matching systems to detect instances of potential non-compliance with the foreign investment rules”.
It would draw on land titles data from the states and territories, its own taxpayer information, foreign investment approvals data and immigration movements data.
The government also wants to amend legislation to make it easier for agencies to share data.
All this would impose increased costs on the government, which would be partially offset by introducing application fees for foreign investment proposals.
The proposed fees for applications for residential real estate would be $5,000 for properties valued at less than $1 million and $10,000 for properties between $1 million and $2 million, with fees then rising in $10,000 increments for every $1 million extra of value.
The government has also proposed a range of penalties for those who breach foreign investment rules, which largely limits overseas buyers to new properties.
Third parties who help foreign investors breach rules could be fined $85,000, imprisoned for two years or both.
Foreigners or temporary residents who acquire new properties without approval could be fined $10,200 in the case of individuals and $51,000 in the case of companies.
Non-residents who acquire established property without approval or temporary residents who acquire more than one established property without approval could be fined 25 per cent of the purchase price or market value of the property, whichever is greater.
Developers who fail to market apartments in Australia could be fined $85,000, imprisoned for two years or both.
Foreigners or developers who fail to comply with reporting conditions associated with approval could be fined $42,500 in the case of individuals and $212,500 in the case of companies.
The government said foreign investment generally benefits the economy, but that it reserves the right to reject proposals that are contrary to the national interest.
It also said there had been “growing community concern” about foreign investment in residential real estate, “particularly in the context of rising house prices in major cities”.