Recommendations of the Committee's Interim
report: Tax arrangements for foreign investment in agriculture and the
limitations of the Foreign Acquisitions and Takeovers Act 1975
Recommendation 1
The committee recommends that in order to prevent tax revenue
leakage and market distortions, the government undertake an extensive review of
the tax arrangements applying to foreign investments and acquisitions in the
agricultural sector.
Recommendation 2
The committee recommends that as part of the broader review
outlined in Recommendation 1, the government should review Australia's tax laws
that apply to tax exemptions for not-for-profit activities for foreign
entities. The review should examine ways to prevent tax revenue leakage when
foreign government entities undertake agricultural production in Australia for
humanitarian purposes or for food security.
Recommendation 3
The committee recommends that the government require that any
non‑commercial production from agricultural land and businesses by
foreign government entities (including for the purposes of food security) is
undertaken within relevant Australian Government foreign aid programs.
Recommendation 4
The committee recommends that as part of the broader review
outlined in Recommendation 1, the government should investigate ways of
developing more rigorous tax liability arrangements for both government-owned
and private foreign entities, particularly in relation to capital gains and
passive income. In this regard, further efforts should be considered to limit
the scope for foreign investors to use business structures, and other possible
loopholes, not available to domestic competitors in order to reduce their tax
burden.
Recommendation 5
The committee recommends that as part of the broader review
outlined in Recommendation 1, the Government review the tax barriers for
Australian organisations that limit Australian investment in long-term
development projects in Australian agriculture. The review should explicitly
compare tax arrangements for domestic entities to those faced by potential
foreign investors in Australian agriculture. The review should also consider
possible reforms of tax regulation to improve incentives for Australian capital
investment in agriculture.
Recommendation 6
The committee recommends that the government undertake a
review of the Foreign Acquisitions and Takeovers Act 1975 with
the aim of developing proposed amendments that address contemporary issues of
foreign investment, particularly in agriculture.
The review should specifically consider:
- the
definition of 'rural land' and 'urban land';
- drawing
a distinction between the treatment of rural land and agricultural business;
and
- any
limitations that the Foreign Acquisitions and Takeovers Act 1975
may place, either explicitly or implicitly, on the Foreign Investment Review
Board's ability to effectively review the level and nature of foreign
investment activities in Australia.
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