Federal government should hang – up on the ‘phone a friend’ loophole

Federal government should hang – up on the ‘phone a friend’ loophole

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When Australia’s head cashier Joe Hockey proudly announced that he had nailed an illegal foreign purchase with the $39.000 million sale of Villa del Mare, or Villa del Nightmare as I prefer to call it, he would not have realised he had potentially opened the largest can of worms in Australian property history. Mark my words this is a now a major election issue that must be intelligently resolved given what is actually happening now is unprecedented and will cost a party an election if it continues to go unchecked and ignored.


I have said for many years now that the Foreign Investment Review Board (FIRB) is right up there in terms of the most hopeless departments in Canberra. As was the case with Villa del Mare you don’t need to contact FIRB, all you need to do is just buy it and if investigated once the divestment order is issued just phone a friend (as was the case with Villa del Mare) and transfer the property into an Australian resident’s name – which is totally legal and requires no further questions (until now).

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This now opens the flood gates for all illegal purchasers to follow suit as this is the legal precedent thanks to this approved divestment order. We can also expect criminals from all over the world will be eyeing Australian real estate as a wonderful vehicle to wash the proceeds of crime. What we have now is a person on unemployment benefits can appear as the owner on say a twenty plus million dollar home due entirely to the many legal loopholes.

SeaShepherd

SYDNEY AERIAL PHOTOGRAPHY


When we look back on federal governments in action we note that they only act quickly on three things – terrorism, natural disasters and wars. When you look at what’s happening to Australian property you could say that today it has a bit of all three in its DNA.

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The burning question is how do you fix this to ensure that the loopholes are closed once and for all? Well that’s easy, as I have always been mystified as to why federal governments are so backwards and lazy in keeping records on Australian property.

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All that needs to be done is when a property exchanges the lawyer or legal representative immediately after exchange logs onto the Australian Taxation Office (ATO) website under Australian Property Register (password protected of course) and provides the name(s) of the purchaser, their address, who acted for them, the address of the property and wait for it – their tax file number. Then the ATO can wash this data as well as providing the information to the FIRB for review.

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If you have a divestment order and the owner phones a friend to transfer the property into their name in order to hold onto the property, then Joe Hockey should immediately get rid of his stupid $5,000 fee on a foreign purchase and replace it with an annual Federal Property Holding Tax at 1.75 per cent of the calculated land value. In the case of Villa del Mare that would be a $525,000 annual tax – so get the foreign buyers to assist Australia in getting its budget back to surplus faster.

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But sadly it’s just not that simple given from July 1 the Abbott government is set to release its Premium Invest Visa (PIV), which is for sale at $15.000 million. Once an applicant has completed their PIV and handed over the required $15.000 million you are rewarded with permanent residency in less than twelve months. The PIV replaces the SIV (Significant Investor Visa) which required $5.000 million investment over a four year term to then get permanent residency. You could be excused for asking oneself just who exactly does the SIV and PIV benefit? But I’m sure you already know the answer to that.


In the meantime the House of Representatives Economics Committee has announced a “new” inquiry into home ownership. I find that simply fascinating given none of them would actually know what exactly they are looking for. The Chair of the Committee, John “Love ‘n Deuce” Alexander, said that ‘home ownership is an issue that lies at the core of the Australian dream and represents the largest investment that most taxpayers will make during their lifetime. The importance of this issue throughout our nation makes it worthy of a detailed inquiry.’ Well isn’t that riveting? Submissions to the inquiry are requested by 26 June 2015, and the proposed reporting date is 03 December 2015.


Oh I get it – the Abbott government will release its action plan just before the next election. See I told you foreign ownership is an election issue.

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I wonder what will happen when I email them this blog titled ‘My Submission’?

MOSMAN – 2088

• Number of houses on the market this time last year – 72

• Number of houses on the market last week – 57

• Number of houses on the market this week – 65

• Number of apartments on the market this time last year – 60

• Number of apartments on the market last week – 49

• Number of apartments on the market this week – 47

CREMORNE – 2090

• Number of houses on the market this time last year – 7

• Number of houses on the market last week – 4

• Number of houses on the market this week – 5

• Number of apartments on the market this time last year – 19

• Number of apartments on the market last week – 10

• Number of apartments on the market this week – 10

NEUTRAL BAY – 2089

• Number of houses on the market this time last year – 9

• Number of houses on the market last week – 3

•Number of houses on the market this week – 6

• Number of apartments on the market this time last year– 36

• Number of apartments on the market last week – 27

• Number of apartments on the market this week – 29

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

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For this week’s open for inspections

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Source: APM Price Finder

4 Responses to “Federal government should hang – up on the ‘phone a friend’ loophole”

  • Janet Carr says:

    I agree with you. It was clear neither party even knew there was a problem before the last election! I’d love to hear their reply to your blog!

  • Gordon says:

    Robert, your proposal for foreign housing investment policy sounds like practical common sense.

    Which probably means there’s no chance the government will adopt it. While some people, who may have a commercial interest in the matter, have said it would be outrageous (!) to do anything about foreign ownership, the fact is that most countries have the kind of disclosure and assessment framework you propose.

  • rsimeon says:

    Janet and Gordon,

    Thanks for your feedback and as you say it will be interesting to see what happens. I certainly won’t be sitting back waiting for a response as we all know that will never happen.

    So I made sure that Alan Jones has my last two blogs on foreign buyers so I expect that this will be pursued next week as he has become very vocal about this subject also.

    Just like the Middle Head development that was recently overturned simply due to Alan’s involvement. I’m initially not asking much – just a National Property Register and tax file numbers to be provided on every property transaction that is executed within Australia.

    What many don’t realise is many overseas buyers have more than the one name so it’s very easy to confuse the system although we know that in Australia you can only have just the one tax file number 🙂

  • Ann says:

    Agree on your annual Federal Property Holding Tax at 1.75 per cent of the calculated land value. Great idea

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