Minister for Immigration Alex Hawke made a statement on Wednesday 19 May on how the Business and Innovation and Investor Program will be changing in 2021. New rules commence on 01 July 2021 and although the legislation is yet to be released, the Minister’s statement gives us a good idea how the program will operate moving forward and how the changes will affect you, the investor.
What is the Business Innovation and Investment Program?
The Business Innovation and Investment Program provides a path for people to migrate to Australia on the proviso that they financially invest in the Australian market. This visa category is one of the fastest and easiest ways to get permanent residency and even citizenship in Australia. It also allows you to bring your immediate family to Australia, something other visas have not always made easy.
What Are the Changes?
The new legislation has not yet been released so we do not have a full picture of the new system, but based on Minister Hawke’s statement, the following changes will occur as of 01 July 2021:
- The 132A and 132B Business Talent visas will no longer exist
- The 188D Premium Investor visa will no longer exist
- The ratios of the Complying Investment Framework are changing
- The threshold for the 188B Investor visa is increasing from $1.5 million to $2.5 million
- The 188B Investor visa will now have to invest in accordance with the Complying Investment Framework
- The term of all 188 visas will be 5 years, but complying visa holders will be able to apply for permanent residency after just 3 years
In summary, the new visas under the Business Innovation and Investment Program are:
How do I get Permanent Residency?
Under the old rules, holders of the 132 Business Talent visa were granted immediate permanent residency. The changes are doing away with this visa and new applicants will have to spend some time as temporary visa holders before they can apply to become permanent residents of Australia. Previously, temporary visa holders in the 188 stream could stay for 4 years and apply for permanent residency at the end of those 4 years. This lead to something of a panic at the end of the 4 years, with visa holders scrambling to get paperwork formalised in time so that a visa extension would not be needed. In order to grant more flexibility, 188 visa holders now have a temporary visa of 5 years but can apply for permanent residency after 3 years, provided they comply with the requirements.
The requirements vary slightly from case to case, but generally speaking to comply with the 188 and qualify for permanent residency, you must:
- Reside in Australia for at least 40 days per calendar year; and
- Your investment must adhere to the rules of the Complying Investment Framework.
Complying Investment Framework
The Complying Investment Framework sets out how the funds must be invested. This framework has always existed for 188 visas but effective 01 July 2021, the percentages allocated into the various components will change.
The components are:
- Venture Capital and Private Equity
This is used to invest in Australian start-ups and small private companies. - Approved Managed Funds
This is used to invest in new companies listed on the Australian Stock Exchange (ASX). - Balancing Investment
the remaining total of investments can comprise any of the above 2 categories.
Perhaps the most significant change of the announcement, is that the holders of 188B Investor visa must now also comply with the Complying Investment Framework (CIF). Prior to this change, holders of the Investor visa could invest their funds into Australian Government bonds. The change has been made to ensure the money coming from investor visas goes to new businesses and creates local jobs. While the CIF is a slightly higher risk venture than government bonds, we hope that potential applicants can see the reasoning behind the change and that it does not dissuade them from their plans to move to Australia.
Entrepreneur Visa
The Entrepreneur visa is the lowest threshold investment visa, requiring an investment of $200,000. The Department of Home Affairs announced in December 2020, that the required assets of the applicant would increase from $800,000 to $1.25 million in July 2021, but yesterday’s announcement was silent on any further changes to this visa. We await the release of the new legislation which will give us all the details on whether anything else is different.
Tax Improvements
Historically, tax for investors in Australia has been needlessly complicated. Following the 2021-2022 Federal Budget announcements it appears the government intends to simplify the tax rules for visa holders. The Australian government plans to replace the existing framework with a new set of rules that are easy to understand and apply. This should reduce the cost of complying with the rules, and provide more certainty for investors.
One new rule is that any person who physically resides in Australia for 183 days or more in a year will be considered an Australian tax resident. Those who have been here for fewer than 183 days will have other criteria but the government assures us these will be simpler and based on measurable facts.
If Australian tax law was putting you off investing in Australia, it is worth revisiting the idea with your financial advisor.
What Now?
If you have the means to invest and you are considering a move to Australia, the Business Innovation and Investment Program remains one of the best pathways to entry, even after the changes. You don’t need to worry about things like points or skills assessments, you can bring your spouse and children with you, and you can apply for permanent residency – now in only 3 years! Of course this is a big decision and we recommend you speak to an experienced lawyer and an independent financial advisor * Make an appointment with Work Visa Lawyers today to discuss whether this is the right visa for you.
*Work Visa Lawyers are not financial advisors and cannot provide you with financial advice – you should also speak with an independent financial advisor before making any investment decisions.
Author
Chris Johnston, Principal Lawyer and Founder of Work Visa Lawyers
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