Significant Investor Visa

Under the Federal Government's Significant Investor Visa initiative, a visa may now be obtained¹ by an investor of $5 million² in certain complying Australian investments if the investor meets residence requirements and is nominated by a participating Australian State or Territory. The visas are for 4 years with 2 possible extensions of up to 2 years each.

Snapshot for fund offerors

A fund that qualifies for visa applicant investment must be:

• Unlisted and not represented as tradable on a financial market
• Either a registered MIS or an unregistered MIS, the interests in which are issued by an AFS licensee
• Limited in investments to the categories specified by the Minister. They include:
  • Australian infrastructure
  • Bonds issued by a Commonwealth, State or Territory government, Australian financial institution or ASX listed company or trust
  • Equity in Australian companies or trusts listed on the ASX
  • Real estate in Australia
  • Australian agribusiness
  • Cash with ADIs
  • Term deposits with Australian financial institutions
  • Other ASIC-regulated managed funds that invest in the above assets.

State and Territory criteria for nominating visa applicants may also be relevant.

Offers to foreign investors must comply with any applicable foreign laws. Significant foreign investment in a fund may make it foreign for Foreign Acquisition and Takeovers Act 1975 purposes. This may be relevant when the Fund is making Australian investments.

State and Territory nomination

As a State or Territory must nominate the visa applicant, the various States and Territories may impose requirements for nomination.

Guidelines have been published specifically for significant investor visa nominations by NSW, SA and Tasmania. Guidelines for Victoria and the ACT are expected to be published shortly. Investment in the nominating State or Territory may be required. For instance, to be nominated by:

• NSW: thirty percent of the $5 million investment must be in NSW Waratah bonds
• South Australia: $3 million must be invested in SA business for at least 2 of the 4 years
• Tasmania: details must be provided by the applicant about the proposed investment in Tasmania and how the investment will benefit the Tasmanian economy.

Residence requirement

Over the 4 year visa period, the investor must spend at least 160 days resident in Australia.

The period of residence in any year can be less than 40 days, provided that the total is met over the 4 years. The applicant must have a genuine intention to reside in the State or Territory that nominated the applicant for the visa.

When the investment is made

The $5 million investment must be made before the visa is granted. However, to ensure that the other criteria for the visa have been met, the Department of Immigration has indicated that the investment should only be made after the office processing the application tells the applicant to proceed.

When the application for the visa is made, the applicant will need to demonstrate that the assets or funds to be used for the investment are available, lawfully acquired and unencumbered.

Prior investments can count toward the $5 million but any prior period for which the investment has been held will not reduce the 4 year investment period required to obtain the visa. The entire $5 million need not be invested in one investment. The applicant can hold several investments and the investments need not be all of the same type or category. The intention is that the $5 million investment will be held for the whole period of the visa. Investments that are realised during the period of the visa must be reinvested into another complying investment within 30 days.

If the value of the investments falls, then this will not mean that the requirements for the visa have not been met or that a top up is required. However, if the value of the investments rises, then the extra value cannot be withdrawn from the investment and retained by the holder of the visa.

Investor

The investment must be held by:

• the visa applicant either alone or together with their spouse or de facto partner;
• a company all of the issued shares in which are held by the visa applicant either alone or together with their spouse or de facto; or
• a trust in which the trustee and beneficiaries are the visa applicant either alone³ or together with the visa applicant's spouse or de facto.

Complying investments

A visa applicant's $5 million of Australian investments may be in:

• Commonwealth, State or Territory government bonds;
• Australian Securities and Investments Commission (ASIC) regulated managed funds with a mandate for investing in Australia; and/or
• direct ownership interests in proprietary Australian companies not listed on the Australian Securities Exchange (ASX), that carry on a qualifying business (for at least 2 years or (if less) the whole investment term) and have not been established wholly or substantially to meet the visa requirement.

ASIC-regulated managed funds

A managed fund is a complying investment if it:

• is a managed investment scheme
• is regulated by ASIC (including investments made through an IDPS) being either:
• registered under Chapter 5C of the Corporations Act, or
• unregistered but the interests in which are issued by the holder of an Australian financial services licence (AFSL)
• is not tradable, and has not been held out as being tradable, on a financial market
• has an investment mandate which is limited to the categories of investment declared by the Minister (listed below).

The Fund's responsible manager must make a compliance declaration (Form 1413) confirming that the mandate for the Fund is to invest only in Australian assets that are limited to:

• infrastructure projects in Australia
• cash held by Australian deposit-taking institutions (ADIs)
• bonds issued by a state or territory government
• bonds or equity in Australian companies or trusts listed on the ASX
• bonds or term deposits issued by Australian financial institutions
• real estate property in Australia, and
• other ASIC-regulated managed funds that invest in the above assets.

The declaration will be published on the Department of Immigration & Citizenship website.

Direct investment

Direct investment can only be made in an unlisted proprietary company that carries on a "qualifying business". A qualifying business is an enterprise that is operated for profit in providing goods or services (other than rental property business) to the public, and is not operated primarily or substantially for speculative or passive investment.

The business can be a new start-up business, but must operate for the period of the visa. If the business is not operated for the whole visa period then it must be shown that a genuine attempt was made to establish and maintain the business.

 

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