Under the changes to FIRB requirements resulting from the Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 all new commercial leases will require FIRB approval, regardless of size. Previously very few commercial leases would have been subject to FIRB approval as the monetary threshold was extremely high (between $60 million and $1.192 billion). As a result of the lowering of thresholds to $0 during the COVID-19 pandemic, all foreign persons entering into leases that will likely exceed 5 years, will require FIRB approval. This amendment only applies to leases entered into after 29 March 2020. Both landlords and tenants must be aware of what or who is classified a ‘foreign person’. A foreign person is defined as:
- Individuals: a person that is not ordinarily a resident in Australia
- Corporations: a corporation where a foreign person holds a substantial interest (20%), or where two or more foreign persons hold an aggregate substantial interest (40%)
If a tenant is required to obtain FIRB approval and does not seek the approval, the Treasurer has the power to rescind the lease. Penalties may also apply. Furthermore, the approval time-frame has been extended from 30 days to 6 months, thus the Board may take up to 6 months to approve a FIRB application.