COVID-19 and foreign investment into Australia - what you need to know

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This article was written by Malcolm Brennan, Caitlin Rodgers and Katie Haywood.

We live in unprecedented times.

On 29 March 2020, the Australian Treasurer announced temporary changes to foreign investment in Australia, reducing the monetary threshold which applies to foreign investment in Australia to $0. 

Contrary to a widespread misconception, this does not mean a freeze on foreign investment into Australia.   

However, it does mean that there will be additional scrutiny of investment and a number of first-time applicants to FIRB.  The additional applications are a part of the need for extension of processing times from 30 days to up to 6 months. 

Importantly, the usual proportionate ownership thresholds have not been impacted and remain in place.  It remains that a privately-owned foreign investor acquiring less than 20% in a non-land rich entity, a privately-owned foreign investor acquiring a less than 10% interest in a land rich entity or a foreign government investor acquiring less than 10% in an Australian company will not need to apply for FIRB approval.  In this way, investment will continue.

All exemptions from the operation of the FIRB legislation are still in place and are unaffected by the Treasurer's announcement. 

The primary change relates to the monetary thresholds set by FIRB.  All previous monetary thresholds have been suspended, meaning that FIRB approval will be required regardless of the monetary value of the investment or nature of the investor where the proportionate ownership thresholds have been met. 

This change is accompanied by a significant increase in the timeframe that FIRB will take to review applications. 

In essence, these changes will see the Australian Government treat all foreign investors as foreign government investors.  Prior to the changes, foreign government were already subject to a $0 threshold. 

Importantly, if an agreement was entered into before the temporary changes came into force, completion has not yet occurred, there will be no requirement to seek FIRB approval. 

The temporary changes are expected to remain in place for at least 6 months, until the effects of COVID-19 have tapered. 

The Treasurer has rightly advised that these changes are necessary in order to prioritise and protect the national interest of Australia in light of the current economic climate.  It must be observed that having to make a FIRB application does not mean that a deal is automatically stopped.  The change in thresholds gives the FIRB and the Treasurer greater vision on investment and the opportunity to ensure that unscrupulous behaviour and value destruction is dealt with appropriately. 

The tightening of the FIRB process will allow the Australian Government to oversee all foreign investment in Australia and prioritise foreign investment which supports Australian jobs and businesses.   This has already been seen with significant efforts being made by Treasury and the Minister's office to support investment rescue packages.  At its core, these changes are about injecting capital into Australia, protecting jobs and business continuity.   (This is not be confused with export activity.). 

The changes are non-discriminatory and impact all foreign investors, regardless of their country of origin.

The changes

In summary, the two changes which will impact foreign investors are:

1.  $0 threshold for all foreign investments

The monetary screening threshold for all foreign investments subject to the Foreign Acquisitions and Takeovers Act 1975 has been reduced to $0. 

Prior to this change, the general value threshold was $275 million for foreign investors and $1.192 billion for agreement country investors.  Other thresholds for land acquisitions have also reduced to $0. 

2.  Extension of application review timeframe

The Treasurer also announced that the timeframe for reviewing applications is being extended from the standard 30-day period to up to 6 months.  Prior to these temporary changes, FIRB was already experiencing significant delays and regularly seeking extensions of the 30-day period.  Now applicants are likely to see further delays in the review process and longer extension requests. 

The Treasurer has said that priority will be given to applications for investments which directly protect and support Australian businesses and jobs. 

David Irvine, Chair of FIRB, has said that efforts will be made to accommodate commercial deadlines however this may prove quite difficult. 

What does this mean for foreign investors?

The change to the monetary threshold will ultimately see a number of foreign investors not previously subject to FIRB approval or conditions required to obtain FIRB approval.  These investors and their advisors will need to become familiar with the foreign investment framework and obtain guidance on how to apply to and engage with FIRB. 

There will undoubtedly be a significant increase in FIRB applications which of itself will extend decision timeframes. 

Foreign government investors or foreign investors acquiring an interest in Australian media business, residential land, mining and production tenements and vacant commercial land will not be affected by the change in threshold, as they were previously subject to a $0 threshold. 

Both current and new applicants will be impacted however by the extension of the review timeframe.  Investors are likely to see significant delays in obtaining approval from the Treasurer, as FIRB is inundated with applications. 


In light of these changes, we recommend that all foreign investors lodge their applications with FIRB as early as possible and allow for significant delays in the review of their application.  Where possible, commercial deadlines should take into consideration the need to obtain FIRB approval and the likelihood for delay.

Proposals that are aimed at saving jobs and preserving Australian business will rightly receive priority and expedited decision and FIRB is to be commended for its approach in this regard. 

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