Australia introduces changes to programs for investors and businessmen
9 minutes read
The popularity of Australia among foreign investors and businessmen is quite natural. The country offers foreigners favorable conditions for doing business and a variety of investment options. The threshold for entering Australian investment programs is much higher than in the United States.
Wealthy foreigners choose Australia
According to statistics provided by New World Wealth, 12,000 foreigners entered Australia in 2019, each with a wealth of $1,000,000 or more. In October 2020, the Australian Department of Home Affairs (DHA), which is responsible for immigration, reported that the backlog had more than quadrupled from the accepted annual investor visa plan. At the time, 30,621 people were waiting in line for entry documents.
The program, which is in effect today, was introduced in 2012. A special program for entrepreneurs was added to it in 2016. However, its current version started in July 2021.
Innovation and business investment play an important role in Australia's economic recovery. The national government, state and territory authorities work together to identify and allocate nominations, which will be available to wealthy migrants, based on the real economic needs of the regions. In 2019-2020, 6,682 visas were scheduled to be issued, but the pandemic has made adjustments. The country now needs to issue 13,500 visas to investors and entrepreneurs in fiscal year 2020-2021 for economic recovery.
A temporary visa (subclass 188) is an entry and residence permit with a validity period of 4 years and 3 months. This visa entitles foreigners to make investments and conduct business in Australia. After meeting all the requirements, participants of the program are entitled to apply for permanent residency.
Changes in the Australian BIIP program
The process of obtaining a visa to Australia for foreign businessmen and investors was changed on July 1, 2021, in order to increase foreign investment in the national economy. A temporary visa (subclass 188) will now be valid for 5 years. At the same time, the minimum period, after which a foreigner can apply for a permanent residence permit, will be 3 years.
The Business Innovation program is for those applicants, who plan to establish a new or existing business in Australia. Entrepreneurs, whose companies have generated an income of AUD 750,000 over the past 5 fiscal years, can implement business innovations.
The Investor visa route is for those foreigners, who are ready to invest in the Australian funds more than 2 500 000 AUD for a period of 3 years. Previously, the amount of investment under the program was not less than 1 500 000 AUD, and the objects of investment were government bonds, yielding from 0% to 1% of income. New investments will be distributed in different directions: 20% would need to be put into a venture capital and private growth fund, 30% into emerging company stocks, and the remaining 50% into a balancing fund.
Significant Investor route requires a willingness to invest 5,000,000 AUD or more in the relevant fund over a 3-year period. Nomination of candidates in this case can be carried out by the national government agency Austrade, responsible for attracting investment and international trade.
The Entrepreneur program is for foreigners, who are ready to start an innovative business in Australia. Now the entrepreneur will not be required to invest the initial capital of the company in the amount of 200 000 AUD, but they will have to get official approval of the planned activity. Applicants are appointed by the regional government and are required to adhere to local business requirements.
Premium Investor visa is issued to foreigners, who are willing to finance the country's economy for 15,000,000 AUD. However, the subclass 132 visa, which requires a significant investment in the business and gives the right to obtain permanent residency, is no longer available.
Basic requirements for participants of investment programs
According to the new rules, the Businessman Innovator, whose visa is unofficially called 188A, must be the owner of at least one or two businesses. Such a businessman should own 30% of the private company's capital or have a 10% stake in a commercial public entity. At the same, the turnover of the company in any 2 out of the last 4 years must be 750,000 AUD. It is also required to have net assets, including personal and commercial, of AUD 1,250,000. Despite the name of the visa field, the candidate's business may not be innovative.
The Investor route, unofficially called the 188B visa, requires the candidate to have AUD 2,500,000. The investor contributes 20% of that amount to venture capital and private growth funds, 30% to a mutual fund of a growth company, and 50% to a balancing fund. This route assumes, that the foreigner will obtain the funds to make the investment from their business activities.
The Significant Investor route, also called SIV or 188C visa, will require the applicant to invest AUD 5,000,000 over 3 years in the same entities as those, provided for the Investor route. However, the funds, including inherited and gifted assets, must be legally obtained by the foreigner. This route has no age restrictions and requires an overseas investor to stay in Australia for no more than 120 days permanently during the first 3 years.
The Entrepreneur route, also called the 188E visa, will require the applicant to pursue an innovative idea for a startup. There are no specific requirements for this program yet, but they will likely include approval from an industry eco-system service provider or through a government entrepreneur panel.
The age threshold for all categories of investors and entrepreneurs, participating in the program, is 55 years old. Applicants can avoid rejection on the basis of age if they offer the best possible terms to a particular Australian government.
The Business Innovator and Significant Investor categories allow for extended temporary residence permit, which is especially relevant for those foreigners, who have not yet become eligible for permanent residency. Candidates, who make a large income outside of Australia, can become Australian tax residents and do not pay tax on foreign income, if they have a temporary visa. Because of this legal nuance, many Significant Investors opt for an extended visa. The maximum period of extension of a temporary residence permit is 9 years.
Program without quotas and restrictions
Australia has always adhered to the principle of equality, and, therefore, its Business Innovation and Investment Program (BIIP) has no quotas or restrictions by country. Also, the government does not give preference to any particular group of businessmen/investors when selecting candidates.
Applications from foreigners are considered on the basis of objective criteria, which must be met by an applicant, intending to receive a particular visa. The set of criteria for assessing an applicant is fixed by law and cannot be cancelled. However, there are also a number of difficulties, related to the recommendations to the evaluation procedure of the candidates.
These guidelines are not commonly used, but all registered migration agents should have free access to this information. The application process will require extensive supporting documents and an understanding of the current situation in the migration services market. Given that the refusal rate for investors to apply for an Australian visa is as high as 17%, the best solution for applicants is to consult with a registered migration agent in advance.
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