Under FIRB regulations, what is the application fee for a foreign investor purchasing an established dwelling valued at $2,500,000?

Q: What is the correct answer to: Under FIRB regulations, what is the application fee for a foreign investor purchasing an established dwelling valued at $2,500,000?

The correct answer is $39,600. Option C ($39,600) is correct because under FIRB regulations, established dwellings valued between $2 million and $3 million attract an application fee of $39,600. This falls within the specific tier for properties of this value range. The FIRB fee structure is legislated and clearly defined, with this particular fee applying to the $2.5 million property mentioned in the question. This fee must be paid before FIRB approval can be granted for the foreign investment.

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

The Foreign Investment Review Board (FIRB) regulates foreign investment in Australian real estate under the Foreign Acquisitions and Takeovers Act 1975. Foreign investors must obtain FIRB approval before purchasing Australian property and pay prescribed application fees. These fees are structured in tiers based on property value and type (vacant land, established dwellings, commercial property). The fee structure is designed to cover administrative costs and generate revenue. Fees are non-refundable and must be paid at the time of application. The tiered system ensures proportional costs relative to investment value.

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

Think of FIRB fees as climbing a ladder where each rung represents $1 million in property value. For established dwellings: Under $1M = $13,200, $1-2M = $26,400, $2-3M = $39,600, $3-4M = $52,800. Each step up the ladder roughly doubles the fee from the base amount. When you see a property value, identify which million-dollar rung it sits on, then apply the corresponding fee. Count the millions and match to the fee structure - this helps quickly eliminate incorrect options.

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

Memorize the key FIRB fee tiers for established dwellings. Focus on the $2-3 million bracket ($39,600) as it's commonly tested. Always check the property value first, then match to the correct tier.

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

A Chinese investor wants to purchase an established house in Sydney's eastern suburbs for $2.5 million. As their buyer's agent, you must advise them about the FIRB application process and associated costs. You explain they need to budget $39,600 for the FIRB application fee, which must be paid upfront and is non-refundable even if approval is denied. This fee is separate from stamp duty, legal costs, and other transaction expenses, significantly impacting their total acquisition costs.

Question

Finance TaxationFIRBMEDIUM

Under FIRB regulations, what is the application fee for a foreign investor purchasing an established dwelling valued at $2,500,000?

Answer Options

A

$13,200

B

$26,400

C

$39,600

D

$52,800