ATO proposes extension mechanism for foreign ownership registration obligations

The Australian Taxation Office (ATO) has released a draft legislative instrument, the Foreign Acquisitions and Takeovers (Register Notices – Extensions of Time) Instrument 2025, for public comment. The draft Instrument enables the Registrar of the Register of Foreign Ownership of Australian Assets to extend the 30-day period within which foreign persons must submit a register notice after a registrable event, such as acquiring or disposing of interests in land, water, businesses, or other Australian assets. This development is designed to address the complexities and challenges foreign entities may face when registering their acquisition or disposal with the Registrar.

Key features of the draft Instrument

Currently, a register notice must be given to the Registrar within 30 days of the registrable event date. Under the Foreign Acquisitions and Takeovers Regulation 2015 (Cth), the Commonwealth Treasurer may, by legislative instrument, extend the period in which a register notice must be given to the Registrar, and, under the Foreign Acquisitions and Takeovers Act 1975 (Cth), the Commonwealth Treasurer has the power to delegate (and has delegated) the power to make such instruments to the Registrar.

The draft Instrument enables the Commissioner of Taxation, who was appointed as the Registrar in November 2022, to consider a range of factors when determining whether to grant an extension (noting that the Instrument will enable the Registrar to grant multiple extensions) to lodge a register notice. The range of factors include the type of interest involved, the timing of the extension request, the foreign person’s efforts to comply, any technical issues with the ATO’s Online Services for Foreign Investors (OSFI) and any other circumstance that the Registrar considers relevant.

When extensions could be available

The accompanying Explanatory Statement provides several examples of scenarios of when extensions may be appropriate:

1. Unawareness of obligations: An Australian company owned by foreign shareholders, unaware of its obligation to register a commercial lease, conducts an internal review and discloses the oversight. Its strong compliance history supports the granting of an extension.

2. High volume of transactions: A property developer creating hundreds of individual lots in a subdivision faces substantial concurrent registration obligations. An extension accommodates the scale of the task.

3. Complex takeovers: A company acquired by a foreign entity becomes a "foreign person" and must register all its assets. Extensions may be granted due to the volume of assets and the proactive engagement of the company.

4. Data availability issues: A foreign investment fund with substantial daily trading activities requires additional time to align its internal reporting processes with registration requirements.

5. Administrative delays: A foreign person unable to obtain necessary information from a conveyancer within the 30-day period may be granted an extension if they act promptly to address the issue.

6. System challenges: A foreign entity experiencing delays in setting up its OSFI account due to technical or security issues may also qualify for an extension.

7. Indirect registration obligations: A company that becomes a foreign person due to changes in its ownership structure may be granted an extension if it promptly seeks clarification and demonstrates a willingness to comply.

The consultation process and what foreign investors should do

The ATO is currently seeking feedback on the draft Instrument and its Explanatory Statement. Submissions are due by 16 July 2025, and stakeholders are encouraged to provide input to ensure the draft Instrument effectively addresses the challenges faced by foreign investors.

For further information or to provide feedback, contact Steven Lochrin at the ATO via email at [email protected] or by phone on (02) 4923 1986.

If the Instrument takes effect in substantially the same form as the draft Instrument, foreign investors should note the examples given in the Explanatory Statement and, where applicable, put to the Registrar similarities between those examples and their circumstances when seeking extensions of time.