Foreign Investment in Agricultural Business in Australia: Taxation Laws and Implications

Executive summary
Every country has its policies concerning investors who are country residents and those who are
nonresidents. Australia has taxation laws that are implemented in small and big entities on both
residents and non-residents in this paper. We talk about the issues of land ownership in Australia
and what is required for one to own land. The paper talks about foreign investments focusing on
those who want to invest in agricultural business in the country as well as giving a definition of a
foreign investor according to the Australian taxation law and the implications of the Australian
law to foreign investors.
Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................1
Agricultural investment................................................................................................................2
Thresholds for agricultural business in Australia........................................................................2
Definition of foreign person.........................................................................................................4
A Foreign government.................................................................................................................4
An international company............................................................................................................4
How to determine interest in a company..................................................................................5
Requirements of Foreigners to investing in agricultural business in Australia........................5
The tax treatment and Implications to foreigners in Australia.....................................................6

Conclusion.......................................................................................................................................7
References........................................................................................................................................8
Introduction
Many countries have the resources they need to invest in agricultural business but most of them
have resorted to food importation except for a few countries among them brazil, Pakistan, Korea,
gulf estates and a many countries in the African continent .Australia invests in agricultural
business with 93% of its food supply coming from within the country. Many countries cannot
manage large farms and have failed in their quest to invest in agriculture, but Australia is among
those countries that are doing well in the agricultural business. Many investors now have the
interest to invest in agricultural business in Australia. Although purchasing land in Australia is
expensive compared to other countries, there are many advantages to investing in their
agricultural business. There is a developed infrastructure, ready markets for farm produce,
skilled labor, and a transparent government.
Agricultural investment
According to McLaren, (2015) foreign persons including foreign government investors need an
approval to invest in the agricultural business if the value that has been accumulated on
agricultural land holdings is more the $15 million. Only those countries that are part of the

Australian Trade Agreement act are excluded. All foreigners require approval to acquire
agricultural land.
The Australian taxation office register must approve ownership of foreign persons acquiring land
in Australia despite the interest value of the acquisition. Any foreigner who wishes to agree to
take a notifiable action should make their wishes known to the treasurer before they enter the
agreement (Butler, 2019)
The Treasury may decide Investing in the land that is a notifiable action requires the following;
 The treasury can decide to object to the action by not imposing condition not to oppose
as long as conditions are complied with to make sure the action doesn't go to the interests
of the nation and order a no objection notification that imposes requirements.
 He can order the stop of the proposed action if he decides that the action is against the
national interest. If significant action against the national interest as already been taken,
the treasurer can issue a disposal order to unwind the action then he can impose actions
(Hearn, 2016)
Thresholds for agricultural business in Australia
According to DeLong (2016), the threshold value of a foreign investor is determined by country
where the foreigner comes from. It will depend on whether the person is or is not a foreign
government investor. If the investor is a foreign government investor, the threshold value is nil
but for the non-foreign government investors, a cumulative threshold value of $15 million is
applied based on the interest value of the land and the acquisition of interest in the land held by
the foreign investor that amounts to more the $ 15 million.

The following are determinant factors, whether transparency and openness were applied in the
selling process or not.
 The scale of the process and the timetable of the sale process
 Given a number of those who were interested in the purchase as well as the number of the
Australian parties who participated in the sale process.
 Whether Australian parties who participated had a chance to bid for the land being
sold(Rogers, Lee, and Yan, 2015)
To be transparent and open in the whole process, the land being sold should be advertised in
public mediums like television, radio, newspaper and on a real estate website that is widely
known .the advertisement within six months before selling the land. All these are to make sure
there are equal chances for bids to purchase the land while it’s still on the market (Moshin, 2015)
Definition of a foreign person
According to the Australian taxation law, a foreigner is a person who is not ordinarily an
Australian resident.
A Foreign government
A foreign company
A company in which a person who is not an "ordinary" resident in Australia holds a significant
interest.
A firm in which a foreign government or organization own significant interest.
A trustee in which a foreign government, corporation or resident hold huge interest (Krause,
2015)