Significant Investor Visa – Strict compliance with SIV investment framework crucial

The Significant Investor Visa (SIV) programme is offered to high net worth investors wishing to migrate to Australia.
The SIV is a stream within the Business Innovation and Investment (Provisional) (Subclass 188) visa and the Business Innovation and Investment (Permanent) (Subclass 888) visa. SIV holders are required to invest $5 million into complying significant investments for a minimum of four years before being eligible to apply for the permanent visa. They must have a genuine intention to maintain/hold the complying significant investments for at least 4 years from the date the temporary (subclass 188) visa was granted.

Investors must prove to the Department of Immigration and Border Protection that each managed fund that they invest in is a “complying” investment. Categories of complying investments are specified by the Minister for Immigration in relevant legislative instruments.

It is extremely important that investors are given independent, specialised, professional advice to ensure that their investments are strictly compliant with the investment framework of the SIV programme.

How the programme works

Austrade, the States and Territories nominate potential SIV applicants. Although there is input from other Government departments, the Department of Immigration manages and administers the programme.

The provisional SIV is a temporary visa valid for 4 years on grant. There is an option to extend the initial four year term (twice for two years at a time) if all necessary criteria are met. This provisional visa gives visa holders time to meet the criteria of and apply for permanent residence..

To be granted the permanent SIV, applicants must genuinely have a realistic commitment to maintain business or investment activities in Australia.

What are complying investments?
Since legislative changes effective 1 July 2015, new SIV applicants must invest at least $5 million in complying investments which must include:

• at least $500,000 in eligible Australian Venture Capital and Growth Private Equity (VCPE) funds registered by AusIndustry investing in start-up and small private companies (expected to increase to $1 million for new applications as the market responds);

• at least $1.5 million in an eligible managed funds or Listed Investment Companies (LIC’s) that invest in emerging companies listed on the Australian Securities Exchange (ASX); and

• a “balancing investment” of up to $3 million in managed funds or LIC’s that invest in a combination of eligible assets that include other ASX listed companies, eligible corporate bonds or notes, annuities and real property (subject to the 10% limit on residential real estate).

All SIV investments must be provided by an Australian Financial Services (AFS) licensed manager domiciled in Australia. Fund managers must be independent of the applicant, the applicant’s spouse or de facto partner, and any “associate” (within the meaning of the Corporations Act 2001) of the applicant.

Is Residential Real Estate included?
Direct investment in residential real estate was never a complying investment for SIV and this has not changed under the complying investment framework introduced last year.

Indirect investment in residential real estate through managed funds is limited. SIV applicants can still independently invest in residential real estate (so long as they comply with all foreign investment rules) but this investment is not part of their complying investment to qualify for permanent residency in Australia.

SIV: complex area of law

The SIV programme is a very complex and highly specialised area of law. It draws on finance law, corporation law, taxation law, administrative law and migration law, with administrative input from a range of Government departments.

The consequences of not complying with the SIV investment framework are very serious in terms of financial loss and migration outcomes. Some investors have discovered that their funds are not compliant!

New investors should seek independent professional advice from a SIV specialist. Existing investors (under the current SIV programme or the earlier one) having any doubts about their investments being compliant should seek independent professional advice without delay.

If you or someone you know wants more information or needs help or advice, please contact us on 02 9299 5815 or email [email protected].