Under current FIRB rules, what is the application fee for foreign investors purchasing new residential property valued at $2 million?

Q: What is the correct answer to: Under current FIRB rules, what is the application fee for foreign investors purchasing new residential property valued at $2 million?

The correct answer is $13,200. Option A ($13,200) is correct under current FIRB regulations. For new residential property valued at $2 million, the application fee is specifically set at $13,200. This fee structure is established under the Foreign Acquisitions and Takeovers Act 1975 and associated regulations. The lower fee for new residential property compared to established property reflects government policy to encourage foreign investment that increases housing stock rather than competing with local buyers for existing homes.

Q: What background knowledge is needed for this Finance Taxation question?

FIRB (Foreign Investment Review Board) administers Australia's foreign investment policy under the Foreign Acquisitions and Takeovers Act 1975. Foreign investors must obtain FIRB approval before purchasing Australian real estate, with application fees varying by property type and value. The fee structure uses a sliding scale, with new residential property attracting lower fees than established property to encourage housing supply. Fees must be paid upon application submission and are non-refundable regardless of approval outcome. Real estate professionals must understand these requirements when advising foreign clients on Australian property investments.

Q: What is a good way to remember the answer to this Finance Taxation question?

Remember '2M-13': For $2 Million new residential property, the FIRB fee is $13,200. Think of it as '13 thousand for 2 million' - the fee is less than 1% of the property value, making it relatively affordable to encourage new housing development. When you see FIRB fee questions, identify if it's new or established property first, then apply the 2M-13 rule for $2 million new residential properties. This gives you a reference point for the sliding scale.

Q: What exam tip applies to this Finance Taxation question?

Always check whether the question refers to 'new' or 'established' residential property, as this significantly affects FIRB fees. New residential property has lower fees to encourage housing supply.

Q: How does this Finance Taxation concept apply in Australian real estate practice?

A Chinese investor wants to purchase a $2 million off-the-plan apartment in Melbourne. As their real estate agent, you must advise them about the $13,200 FIRB application fee required before settlement. This fee must be paid when submitting the FIRB application, typically after signing the contract but before settlement. The investor needs to budget for this cost alongside stamp duty, legal fees, and other purchase costs. Failure to obtain FIRB approval before settlement would breach Australian foreign investment laws.

Question

Finance TaxationFIRBMEDIUM

Under current FIRB rules, what is the application fee for foreign investors purchasing new residential property valued at $2 million?

Answer Options

A

$13,200

B

$26,400

C

$39,600

D

$52,800