On 29 June 2015 and 1 July 2015, the Federal
Government released new regulations which made changes to the Significant
Investor Visa (SIV) regime and introduced the new Premium
Investor Visa (PIV) sub-class.
The key changes in the new regulations include:
the creation of the new PIV sub-class of investor
visas which provides access to permanent residency after 12 months and requires
the applicant to make a complying investment of $15 million;
changes to the types of investments which are
acceptable for SIVs and PIVs;
the granting of additional powers to Austrade to make
nominations for the SIV and PIV and to monitor the market; and
transitional changes which preserves that eligibility
of applicants who were granted the sub-class 188 SIV prior to 1 July 2015 who
invested under previous complying investment rules.
Recap of the SIV program
The SIV program was introduced in November 2012 and
provided a two step pathway to permanent residency for investors who invest a
minimum of $5 million over a 4 year period in a complying investment.
The key features of the SIV program which underpinned
its success in the 2 ½ years since its initial introduction were:
unlike other skilled visa or business visa
categories, there were no English language requirements or business skills
requirements that needed to be satisfied;
an applicant was not required to operate a business
in Australia. Instead, an applicant for the SIV needed to invest in complying
investments which included, amongst other things, State or Territory Government
bonds, complying managed funds which invested in Australian listed shares,
corporate bonds, mortgages, agribusiness, infrastructure or real estate, or
private companies which passed sponsorship requirements determined by State or
Territory Governments and the Department of Immigration and Border Protection
(DIBP); and
SIV holders only needed to be in Australia for 40
days per year for 4 years to satisfy the residency requirement in order to apply
for Australian permanent residency.
The SIV program attracted strong demand from
prospective high net worth investor migrants (particularly from China and Asia).
As at December 2014, almost 500 SIVs were granted resulting in the injection or
the proposed injection of approximately $2.5 billion into the Australian
economy.
Key SIV changes
In October 2014, the Federal Government undertook a
review of the SIV program with the purpose of re-tasking SIV investments into
areas of the economy where the injection of capital would significantly
encourage growth and entrepreneurial activity and exploring the possibility of
introducing a PIV program. The review, which was administered in conjunction
with Austrade, the Minister of Trade and Investment and the DIBP, undertook a
number of rounds of consultation before announcing the revamped SIV
program.
Whereas previously, complying investments for SIV
purposes provided significant flexibility regarding the choice to invest
in government bonds, certain types of managed funds and private companies, from
1 July 2015 complying investments will now include mandatory allocations to
certain types of assets including:
Venture Capital Investments: a
minimum of $500,000 investment in an Australian venture capital fund which
invests in start-ups and small private companies. The venture capital component
must be invested in an AusIndustry registered Venture Capital Limited
Partnership (VCLP), an Early Stage Venture Capital Limited
Partnership (ESVCLP) or an Australian Venture Capital Fund of
Funds (AFOF). Venture capital funds do not have to be invested
immediately. SIV applicants will have a period of 12 months following the grant
of the provisional visa to make an investment in an eligible VCLP or ESVCLP.
Where investments in venture capital funds are realised before the end of the 4
year term of the provisional SIV (sub-class 188), the realised capital must be
reinvested in a complying venture capital investment, Emerging Companies
Investment or Balancing Investment which complies (see next two bullet
points) with the rules;
Emerging Companies Investments: a
minimum of $1.5 million investment in a complying managed fund which invests in
emerging companies (companies which have a market capitalisation of less than
$500 million). There is some flexibility for the complying managed fund to
invest a certain allocation of its assets in unlisted companies, companies with
market capitalisation greater than $500 million and foreign companies and cash
and derivatives (for risk management purposes only), however, there are strict
valuation limits on those investments. The emerging companies fund is also
required to maintain a portfolio of securities issued by no less than 20
different issuers and the fund must not invest more than 10% of its net asset
value in any one security issuer; and
Balancing Investments: the balance
of investment in complying managed funds which invests in listed Australian
companies, Australian corporate bonds/notes in listed Australian companies,
deferred annuities or non-residential real estate in Australia (there is a 10%
limit on residential real estate for the complying fund).
In respect of the balancing investments and the
emerging companies funds, a further requirement is that fund managers responsible for managing
Emerging Companies Investments must hold at least $100 million firm wide funds
under management in order to qualify for SIV compliance.
Other key changes are:
investors and their associates (e.g. spouse or
related companies) must not be involved in the management of the investment
structure in which the managed funds invest through;
investments in Australian private companies and State
and Territory Government bonds will no longer qualify for SIV;
investments in Australian mortgage funds are not
complying investments from 1 July 2015 onwards; and
loan back funds where the interests in the fund is
used as collateral for loans will no longer be permitted.
Premium Investor Visa Updates
The Premium Investor Visa will be introduced on 1 July
2015 which requires a $15 million complying investment. PIV holders will be able
to apply for an Australian permanent visa 12 months after the investment as
opposed to the 48 months required for SIV holders.
PIVs are based on referrals from State/Territory
Governments and are designed to attract entrepreneurial skill or talent to
Australia. Austrade will assess and nominate the candidate.
PIV investments can either be made directly or through
managed funds into Australian listed securities, government bonds/notes,
corporate bonds issued by Australian public listed companies, private Australian
companies, property in Australia (excluding residential real estate), and
annuities issued by Australian life companies.
