FIRB Crackdown – Has Mr Morrison dozed off?

People are starting to notice that there has not been much news lately on Mr Morrison’s tough guy crackdown on foreigners breaking our new laws on residential property investment.

What new laws did you say?

The laws that the government introduced, on the recommendation of the very charming Ms Kelly O’Dwyer, that were designed to encourage foreign investors to build new housing rather than join in the ponzi price speculation game with existing housing that the locals love so much.

Yes, yes- a few have noticed that Mr Morrison has been complaining about Mr Bowen’s proposed negative gearing laws that are also designed to direct investment toward new construction rather than existing housing – but we will let that go through to the keeper today.

Well anyway back to the story.

After a few well publicized and “spot light moment” announcements by Mr Morrison wearing his finest tough guy squinty look, things have gone very quiet in the FIRB “announce-ables” department since January 2016.

Has the government become so reform-phobic that it is reasonable to conclude that Mr Malcolm Turnbull and Mr Morrison have lost their nerve and pulled the plug on another reform – even one they started only 6 months ago?

When the government starts reaching into its “vision bag” like Mr Rudd and pulling out plans for high speed rail to “girt” the continent anything is possible.

Temporary residents buying existing properties

Though it is debatable whether a temporary resident should be allowed to acquire title to an existing house while they are swotting away, completing a Masters in Property Prices, over a few years in Australia, the law allows them to do so – provided that they dispose/sell of the property within 3 months of ceasing to be a temporary resident.

Considering how hopeless the FIRB has proved to be over many years policing the laws relating to foreign investment – no data, no monitoring, no enforcement, no sniffing around – it is likely that there are large numbers of existing houses that were bought by temporary residents, who have now departed Australia, that should have been sold a long long time ago.

All those university students studying Masters in Hair Care essentials, in a million dollar suburban house purchased by mum and dad back home (or a dear uncle or a cousin that likes an international property punt), that have now returned home but “forgot” to sell the study shack on departure.

All those arrivals on fruity flavours of working visas who have now returned back home after making their fortunes serving slurpees at late night convenience stores.

The lack of recent activity by Mr Morrison’s minions is surprising because the ATO now has a fantastic data set of people movement information from the Department of people coming to Oz” and land title data from various state and territory governments stretching back 32 years.

We are not talking about a complicated data matching exercise either.

Step 1.

Obtain list of all temporary residents who have departed Australia within the last 5 years (i.e. are no longer entitled to own existing property) and have been gone for at least 3 months.

Step 2.

Run that list of names against the list of names of people identified as transferee on transfers of property over the last 10 years in all States and territories. The ATO should use their Pentium II with 4G of RAM for this task and make a nice cup of tea.

Step 3.

Send the resulting list of names a short letter as follows.

Dear registered title owner,

Re:   Registered title details:   Mansion 5, Fox Hunt drive, Ponziville.

The Australian Tax Office has been asked to give our friends at the FIRB a hand because we have some pretty fast desktops with lots of RAM. We also have a few floppies with lots of names.

Your name is the same as a temporary resident who left the country more than 3 months ago or has otherwise lost any entitlement they may have had to own existing property. Temporary residents who departed the country more 3 months ago or who have otherwise lost their entitlement to own existing property are required to sell any existing property they own asap.

Unfortunately, our records are so bad we don’t really know who you are and we need to make sure that you are not  on our list of temporary resident who have lost their existing property owning powers, because if you are you need to sell the property above before we start getting heavy.

Please answer the questions below and sign the form and return it to us within 14 days and we will not bug you again (unless we really need to).

If you don’t answer the form – we will send a man with a large dog to the above registered title and find out who is living there and go from there.

Don’t make us cranky please.

  • What is your full name and date of birth
  • What country were you born in
  • If not Australia when did you first arrive.
  • Are you an Australian citizen
  • Are you a permanent resident
  • What is your tax file no.
  • Do you have a passport?
  • Please provide details of the passport number, country of issue for your Australian passport or the passport you used when you first entered Australia.

Now grab a sprig of wattle, hold it in your hand and say the follow

“The answers above are the truth Scout’s honour – Amen”

Regards

Your friendly Taxman.

Foreign investors buying existing properties

To find existing properties that have been bought illegally by foreign investors – i.e. people that have never been resident temporary or permanent and should never have bought existing property at all. The approach required is slightly different because the properties affected will be a little harder to identify.

Step 1.

Have people provide details in this years Tax Return of all properties they are listed as registered owner.  This will allow the ATO to fill in lots of blanks in their database of who owns what land in Australia.

Step 2.

Start looking at all properties that were not listed in tax returns which have been bought or sold in the last 10 years. 10 years should be enough to avoid properties held for long periods by locals who don’t need to submit tax returns.  In due course the ATO will be able to work out which land titles are clearly owned by people with an entitlement to do so and which ones have a few question marks around them.

Resolving those question marks would be an excellent task for a team of interns.

4 thoughts on “FIRB Crackdown – Has Mr Morrison dozed off?

    • Though your obsessions may not extend to unproductive capital inflows you can at least relax in the knowledge that the post you have just savoured is a revised, spruced and extended version of a comment made on MB earlier today.

      Liked by 1 person

      • Not entirely unproductive – these capital inflows feed their way thru the economy – trickle down I think is the terminology.

        Like

        • Trickle down is a bit old fashioned and should be used only with “leg warmers and padded shoulders” .

          Now the bright young things talk about the “wealth effect” when they mean that making some asset owners wealthy makes them more inclined to pay someone else to cook them dinner, shine their shoes and arrange those lines of credit that makes the assets prices rise at a nice rate and thereby support more lines of credit.

          Printing money is never a problem when it is only printed for the right people – aka credit worthy.

          Like

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