In our very first video blog, one of our lawyers Shirley Ip addresses a question commonly asked by business and investment migrants to Australia regarding their tax residency and taxation of their overseas generated income.
On 17 November 2014, Australia and China signed a declaration of intent in relation to the China – Australia Free Trade Agreement. While the specific details of the agreement will be fully reflected in formal documentation due to be signed later this year, the declaration of intent provides for the following key outcomes:
- Removal of tariffs: The gradual removal of tariffs on approximately 95% of goods exported from Australia over the course of the next 15 years including dairy, beef, live animal exports, lamb, wine, horticulture products and seafood.
- Resources, Energy and Manufacturing: The gradual removal of tariffs in relation to resources and energy products (including coal), transformed resources and energy products, pharmaceuticals and other manufactured products.
- Services: Liberalisation of market access for Australia’s strong service sector including a framework to advance mutual recognition of services qualifications. Service providers that stand to benefit include Australian banks, financial services, insurers, law firms, telecommunications, tourism and travel related services, health and aged care services, construction and engineering services, transport and education providers.
- Skilled worker mobility: Businesses engaged in large infrastructure projects above $150 million will have the benefit of entering into Investment Facilitation Agreements to more effectively allow for labour force mobility and improving temporary entry access into Australia and China.
- Increased FIRB threshold: The threshold at which Chinese investors are required to seek FIRB approval in relation to proposed investments in non-sensitive sectors will increase from the current $248 million to $1,078 million. The requirement to obtain FIRB approval in relation to sensitive sectors and investments by state owned enterprises will continue unchanged.
- Work and Holiday arrangement: Australia will grant new work and holiday arrangement visas to 5,000 Chinese work and holiday makers annually with a view to further developing Australia’s tourism sector.
Evolve Lawyers is proud to announce its sponsorship of the Australia-China Youth Association – Monash Chapter.
The Evolve team takes a look at how the recently announced Premium Investor Visa (PIV) is positioned relative to the current Significant Investor Visa (SIV) and the resulting implications to intending high net worth visa applicants to Australia.
A new business and investment visa class
On Tuesday, 14 October 2014, Prime Minister Tony Abbott announced that a new visa class known as the PIV will be introduced from 1 July 2015. While further particulars will be announced in coming months following a period of consultation, the Government has earmarked the key criteria. These are set out below and compared against corresponding criteria under the SIV.
| Matter | PIV | SIV (including announced amendments) |
| Minimum complying investment amount | $15 million | $5 million |
| Australian residency requirements during temporary phase | Nil | 160 days over a 4 year period for primary applicants and a new requirement for 180 days per year for secondary applicants |
| Transition to permanent visa | After 12 months of maintaining the complying investment | After 48 months of maintaining the complying investment |
| Nominating body | Austrade | Austrade, state and territory governments |
The PIV and SIV
In our experience, there are invariably a number of common issues that arise in the context of high net worth visa applicants. With the announcement of the PIV together with certain amendments to the SIV program, below is a summary of the impact of these announcements on some of the common issues.
1. Source of funds
Under the SIV, the funds used to make a complying investment must be unencumbered, legally acquired and owned by the applicant. We do not expect that this will be any different for PIV applicants.
However, we have found that proving ‘ownership’ of funds has its challenges for SIV applicants, particularly where the applicant is not necessarily the legal holder of assets. As it may be unrealistic to expect that a PIV applicant will hold $15 million in his / her own name, the success of the PIV will require the Government to provide clear indication on the extent to which beneficial ownership arrangements (or certain ‘control’ arrangements) will be recognised for a PIV applicant.
2. Residence requirements
The current position for SIV applicants is that only the primary applicant needs to satisfy the residency requirement of 160 days over 4 years (any secondary applicants can remain offshore). This feature has been used by applicants to structure their affairs such that the main income earner of a family unit is permitted to remain offshore to attend to business affairs while the spouse satisfies the residency requirements in Australia (often with the family’s children).
However, the Government appears to have closed this option by announcing that the SIV will shortly require secondary applicants to reside in Australia for 180 days per year.
Accordingly, if it is imperative for a family member to remain offshore to attend to business and other affairs, it appears that this can no longer be achieved under the SIV (given all family members will have a residency requirement) and applicants with such requirements will be required to apply under PIV.
3. Tax residency
A key concern of many SIV applicants is the extent to which they would be recognised under Australian law as a tax resident. Given the relatively low residency requirement of 160 days over the course of 4 years, the SIV generally provided applicants with comfort that their affairs could be managed in a way where they would not be regarded as an Australian tax resident.
However, as the 180 days per year residency requirement will be introduced by the Government in a bid to require family units of SIV applicants to settle and establish a presence in Australia, managing tax residence issues for SIV applicants is likely to be increasingly difficult.
Conclusions – Shifting incentives
It is apparent that some of the advantages currently afforded to applicants under the SIV program will soon be closed off and made available only under the PIV program. Although the SIV still offers ample flexibility, applicants seeking to achieve permanent residency in Australia with specific residency and taxation objectives may find that a $15 million PIV visa is the only viable option.
This result is not surprising given the Government’s intention to ensure that foreign investments are channelled into areas of the Australian economy that need it most.
Evolve Lawyers has extensive experience acting for intending business and investment migrants, particularly those from the Asia Pacific region. We will be making submissions to the Government on the above matters and other proposed amendments to the business and investment visa streams over coming months. We welcome any additional thoughts or comments from our readers.
The Government today announced important changes to the Significant Investor Visa and creation of a Premium Investor Visa (PIV).
The new PIV will require an investment of $15 million, nomination by Austrade and has no residency requirements. PIV holders will be eligible for permanent residency after holding the complying investment for 12 months.
Other changes include:
the involvement of Austrade in the nomination of applicants on behalf of the Australian Government and in determining complying investment policy;
- allowing ‘role swapping’ between primary and secondary applicants during the provisional visa stage;
- introduction of 180 day residency requirements for secondary visa holders; and
- changes to improve visa processing times.
The changes will be made progressively through the 2014-15 programme year, with changes requiring legislative amendment expected to come into effect from 1 July 2015.
These changes will not apply to current SIV holders or current applications.
We have also made relevant enquiry to the Department to further clarify their intention on the continued use of leveraged investment for potential SIV applicants. We will communicate the outcome to you as soon as possible.
The Evolve team
Source: MIA
Great write up by Lawyers Weekly on work / life balance featuring our very own Shirley Ip.
During an address to the National Press Club held in Canberra last Wednesday, 10 September 2014, the Hon. Scott Morrison provided an update on the Government’s position in relation to the 457 skilled work visa and 188/888 significant investor visa programmes.
Below are some key points from Minister Morrison’s address.
Significant Investor Visa Program
The Government will be supporting proposals to prevent the ‘recycling’ of investment funds by requiring complying investments to remain unencumbered during the 4 year period in which a visa applicant is required to hold the complying investment. Whether there will be any exceptions to this rule and whether the rule will have retrospective application to existing SIV visa holders remain to be seen. It is expected that the Government will release further details about this proposal and other comments on the SIV programme in the weeks ahead.
In the interim, managers of current complying managed investment scheme products that allow visa applicants to leverage from the investment made in the scheme may be required to undertake a review of their offering in light of Minister Morrison’s latest comments.
457 Visa Program
Minister Morrison provided the Government’s thoughts on the just released report by the panel conducting the Independent Review into Integrity in the Subclass 457 programme. Minister Morrison said the report of 22 recommendations was ‘balanced and measured’ but did not specifically provide any details on the implementation of the recommendations. The key recommendations arising from the review were:
- the abolishment of labour market testing;
- a reduction to the market salary rate exemption threshold from $250,000 to $180,000;
- freezing the temporary skilled migration income threshold at $53,900 p.a. for at least 2 years with the possibility of a 10% reduction to the threshold;
- English language requirement to be relaxed by requiring an average IELTS score of 5 (currently, applicants are required to score at least 5 across all four competencies); and
- more robust compliance requirements and banning employees from paying employers to sponsor them.
For Minister Morrison’s full address please see http://www.minister.immi.gov.au/media/sm/2014/sm217736.htm
The Evolve Team is excited to announce the addition of Shirley Ip as a director and lawyer of our practice.
Shirley is an experienced corporate lawyer having practised as a finance lawyer in various Australian top-tier and national mid-tier law firms specialising in project financing, property financing and general corporate finance. Prior to life as a lawyer, she held roles in Australia’s ‘big 4’ accounting firms as a chartered accountant and tax consultant.
Shirley’s depth of experience in tax and finance enables her to provide robust and tax effective structuring advice for clients looking to establish, operate or invest in a business or investment structure across a range of industries including energy and resources, primary production and property development. She has a keen interest on assisting intending business and investment migrants to Australia with the structuring of their Australian investments and businesses.
Shirley is fluent in English, Cantonese and Mandarin and is also a registered migration agent (MARN 1387902).
If any of you would like to get in touch with Shirley, her email is sip@evolvelawyers.com.au
The Evolve Team visited China for two weeks during the month of June to attend the Australia – China Trade and Investment Expo and to also take part in the Significant Investor Visa Forum hosted by the Migration Institute of Australia at the Wanda Sofitel Hotel in Beijing (SIV Forum).
The SIV Forum was well attended by various industry professionals, representatives from Australian State and Territory Governments and representatives from the Department of Immigration and Border Protection (DIBP) in Hong Kong.
Erica Biddle (Consul, Immigration) presented on behalf of the DIBP in Hong Kong (being the DIBP office responsible for processing SIV/188C visas for applicants in mainland China, Hong Kong, Macau and Taiwan). Ms Biddle shared some valuable insights from her experience in dealing with SIV applications received by the DIBP in Hong Kong. Particularly, the following statistics are of note:
- the current processing time standard is 9 months and this has generally been met in practice;
- 873 SIV applications have been received by the Hong Kong office with 327 applications finalised;
- of the 327 finalised applications, 225 visas were granted, 32 applications refused and 70 applications withdrawn. This represents a success rate of roughly 90%; and
- as at 31 May 2014:
- 90.4% of SIV applicants were from mainland China and 85.5% of visa grants were to Chinese nationals;
- 1446 expressions of interest have been submitted; and
- a total of $1.275 billion have been invested in Australia by way of SIV complying investments
The trip also gave members of the Evolve Team the opportunity to meet existing clients and further develop relationships with key industry stakeholders across various Chinese cities including Chong Qing, Hang Zhou, Ning Bo, Xiang Shan and Beijing.
Until next time – the Evolve Team
The event was attended by relevant government body representatives (including The Hon Scott Morrison (Federal Minister for Immigration and Border Protection)), domestic and international lawyers, migration agents, fund managers, financial institutions and venture capital companies. An update on recent statistics relating to the SIV program provided some valuable insights into the development of the program since the visa class was introduced. Namely: Read More
Welcome to our first blog post and the launch of our website.
Evolve Lawyers was established with a desire to assist our clients through each phase of their business’ development. From the establishment of an appropriate business or investment structure through to providing sound legal advice to facilitate a growth or exit strategy; our aim is to ultimately work towards the success of our clients’ business. Read More
