Significant Investor Visa

Transcription

1 Australia s first Significant Investor Visa

2 1. Overview In May 2012, the Australian Government announced that it would introduce a new stream of visa referred to as the Significant Investor Visa (SIV) as part of the Business Innovation and Investment Program. The Significant Investor Visa would provide high net worth individuals with the ability to apply for an Australian visa and ultimately permanent residence in Australia on the basis of a minimum investment in Australia of AU$5 million. The focus of the Significant Investor Visa is to promote investment-based migration into Australia by high net worth individuals. Consequently, the visa criteria facilitates this objective and does not contain restrictions found elsewhere. For example: There is no upper age limit for a Significant Investor Visa. There is no points test for a Significant Investor Visa. There is no English language threshold for a Significant Investor Visa (although there are higher visa application fees if the applicant or dependents do not have functional English). Members of the applicant s family unit can apply to get a secondary visa. A family unit consists of: A spouse or de facto partner. A dependent child of the applicant or the applicant s spouse. A dependent child of a dependent child of the applicant or the applicant s spouse. A relative of the applicant or of the applicant s spouse who does not have a spouse, is usually a resident in the applicant s household and is wholly or substantially financially dependent on the applicant. A relative is defined as a stepchild, grandparent, grandchild, aunt, uncle, niece or nephew, or a step-grandparent, step-grandchild, step-aunt, step-uncle, step-niece or step-nephew. In order to be granted a secondary visa, the applicant s family members must meet relevant character, health and security requirements. Children must have the proper permission to lawfully travel and live overseas, particularly where their parents are divorced or separated.

3 2. Basic Conditions Step1 First the applicant must be sponsored by a particular State or Territory prior to applying for the 888 visa. Please refer to our web site for the basic conditions each State or Territory has indicated a successful applicant is required to meet, to be sponsored for a SIV. Step2 The applicant must meet the complying investment requirements. Eligible complying investments include: Commonwealth state or territory government bonds. ASIC-regulated managed funds with a mandate for investing in Australia. Direct investment into Australian proprietary companies. Further information on each of these three criteria is provided below. Commonwealth state or territory government bonds The issuing authority for each state and territory bond is as follows: Security Government Bonds of Victoria New South Wales Treasury Bonds Waratah Bonds Queensland Bonds Queensland Industry Bonds TASCORP Inscribed Stock Territory Bonds Western Australian State Bonds South Australian Government Financing Authority Bonds Issuing Authority Treasury Corporation of Victoria New South Wales Treasury Corporation New South Wales Treasury Corporation Queensland Treasury Corporation Queensland Industry Development Corporation before 1 December 1996 Tasmanian Public Finance Corporation Northern Territory Treasury Corporation Western Australian Treasury Corporation Government Financing Authority Managed Fund Such funds must have a mandate for investing in one or more of the following Australian assets: Infrastructure projects in Australia. Cash held by Australian deposit-taking institutions. Bonds issued by the Australian Government or a State or Territory Government. Bonds, equity, hybrids or other corporate debt in Australian companies and trusts listed on any Australian stock exchange. Bonds or term deposits issued by Australian financial institutions. Real estate in Australia. Australian agribusiness.

4 Typically the Fund can be an unregistered managed investment scheme, provided the trustee of the fund holds an Australian Financial Services Licence (AFSL), and the investment in the fund is made directly or indirectly through an investor directed portfolio service, and the fund is offered only to a limited number of high net worth investors and is not open to the general public. The basic requirements of a managed investment scheme (i.e. the Fund) are; i. People contribute money for rights/units (needs to be more than 1). ii. Contributions are pooled. iii. Members don t have day-to-day control. Direct investment into a private Australian company In order to meet this requirement, the applicant must obtain an ownership interest in the company and the company must: Genuinely operate a qualifying business in Australia. Be registered with ASIC. Have an Australian Business Number. Not have been established wholly or substantially for the purposes of meeting the complying investment requirement. In this regards you will need to consult a lawyer as what is a qualifying business. 3. Quantum s unique structure Quantum is offering a unique arrangement for SIV applicants to maintain their own managed Fund for them and their Family to use in Australia. This can also be expanded to allow them to pool their monies with other friends and/or relatives, in 2 or more SIV Complying Funds (for example 2 applicants can pool $5m each to have a $10m Fund to invest into Australia, each owning 50%). The key advantages of this arrangement are; Choice of Investments Flexibility Control Ease of Establishment Security Captial Guaranteed High Performance Direct Property Gearing Income paid Quarterly Personal Tax Returns On Line Reporting So long as the investments meet the requirements of the legislation (i.e. complying investments), Quantum will transact monies as directed by the applicant into various investments of their choice. Quantum via QSMART Securities will work with each applicant to ensure that the investment mix and allocation meets their risk profile and investment objectives. Quantum s structure provides a flexible investment mandate, providing the investor with a greater level of control. The investor can choose to invest in direct property, shares and fixed interest, bonds, other managed funds or just have the funds invested in a domestic bank account. Of course Quantum will advise them to ensure that their investment selection continues to meet the legal requirements to maintain the SIV application until the 4th year anniversary, or when PR (permanent residency) is granted. Quantum is able to establish a complying Fund structure within 10 days of notification. All assets will be held by an independent public trustee company, ensuring that your monies are securely held on your behalf. Quantum can offer fully backed, 100% guarantees on your investments. This guarantee is offered on bank backed products, some offered by the Australian Federal Government. Investments in guaranteed share market products issued by some of the largest private banks in the world (i.e. UBS, Goldman Sachs, Deutsch Bank) allow the investor to generate high returns with full peace of mind that no capital loss will occur should the share market fall. Ability to purchase direct property of the investor s choice, in any location within Australia. Ability to borrow (gear) against any property/share investment to enhance returns. Income can be paid to investors quarterly via direct debit into their own bank account. All personal tax returns for the applicant are provided for each year. On-line portal provides up-to-date portfolio balance at the end of each day.

5 4. The Investment structure If you decide to use the Quantum investment structure, we will establish your own managed fund, with an independent public trustee company as the custodian to hold your investments. The legal components we will provide to establish your Fund will include the following; Register a Compliant Constitution. Name the Fund. (Your choice, some words restricted such as Bank, Trust Company) Appoint independent public trustee. Open a bank account in your choice of currency. Issue share certificates of ownership. Open registered office and place of business. Appoint manager of the Fund. Open and manage the share register. Apply for tax file number/s. Register for all Government approvals. Time to incorporate the Fund, approximately 10 working days. Quantum will also issue you your own personalised Investment Memorandum (IM) that will clearly outline the rules and responsibilities of Quantum, how it will act and transact your investments on your behalf. The typical Family Fund structure looks like this; Own Family Fund (single account) (AFSL ) Public Trustee (Custodian) Direct Bonds Direct Property Direct Shares Other Assets Managed Funds Quantum will each year provide you with the following services; Complete annual account. Lodge tax returns. Have account audited by a public auditor (if requested). Provide access to on-line reporting. Pay distributions quarterly (if requested we can re-invest all distributions).

6 5. Who is Quantum The responsible entity for your Fund will be Quantum Funds Management Limited (Quantum). Quantum holds an Australian Financial Services Licence, numbered issued by ASIC, which authorises it, amongst other things, to operate and manage your Fund under the SIV arrangements. Quantum is owned by and forms part of the Quantum Group of companies (the parent company is Quantum Group Holdings Pty Ltd), a leading investment group established in 1986 that provides a complete range of financial advisory and funds management services to both retail and institutional Investors, including; property syndicates and funds; registered mortgage funds; wholesale mezzanine development funds; Quantum portfolio warrants; Quantum direct property investments; Quantum accounting practice; and QSmart and private wealth advisory platform. Quantum Funds Management Limited RE to the Fund ASFL Quantum Investment Solutions Pty Ltd Issues of portfolio warrants Licensed dealer in securities AFSL Quantum Finances Pty Ltd Meszzannine and mortgage manager QSMART Securities Pty Ltd Licensed dealer in securities AFSL Companies within the Quantum Group have been in operation since 1986, providing both financial advice and investment funds in a range of property, mortgage and listed equity investments to investors. Over this period, the Quantum Group of companies has being an active purchaser of real estate assets in development, opportunistic and core property asset classes across most property sectors including commercial office, retail, industrial and residential. Quantum employs staff of 20, including six senior managers and was founded by the current Managing Director, Peter Gribble over 26 years ago. Quantum employs a disciplined underwriting methodology and investment criteria; focuses on capital preservation, active asset management and relies on its market knowledge and expertise to identify investments. Quantum is able to offer an overall investment strategy that combines and focuses on four core components that it believes are critical to the success of a property focused investment strategy: access to proprietary deal flow; transactional expertise; effective asset management; calculated exit strategies. Quantum believes its proven investment strategy uniquely positions the company to source, structure and create attractive real estate investments and believes its strategy will deliver strong returns for the Fund. A sample of Quantum s public offers, since 1999 can be found at its web site

7 6. Next Steps The steps in starting the application process for a SIV include the following; Step 1 Application Information is submitted onto a web page/data base at Step 2 Assessment Information is reviewed and assessed if the applicant is suitable for a SIV process, by lawyers/quantum. Step 3 Prepare State assessment Liaise with State Government to, discuss/secure nomination. Obtain documents, engage letter, form 956. Step 6 State Nomination Submit a nomination application to a State Government. Step 5 Lodge EOI Lodge Skills Select. Step 4 Proof of Funds State assessment positive, proof of Funds. Once EOI (expression of interest) by a State Government has been approved, you can move to finalising your Visa application (188 approvals). Step 7 Visa Application 188 Prepare and submit Visa Application. Step 8 Form 1413 approval Commit $5m and obtain Form Step 9 Issue Provisional Visa Visa Issued. Once a Provisional Visa has been held for + 4 years a permanent visa can be issued. So enter our web site at to activate your visa application today.

8 7. Questions and Answers Below we have provided frequently asked questions (FAQ s) to provide some information on the requirements of potential holders of the Significant Investor Visa. Q: How can the Significant Investor Visa be obtained? In order to apply for the Significant Investor Visa, applicants must: Submit an expression of interest in SkillSelect (an online service that enables skilled workers and business people interested in migrating to Australia to record their details to be considered for a skilled visa). Be nominated by a state or territory government. Make investments of at least $5 million into complying investments for a minimum of four years. The NSW Government has announced that in order to be nominated by the NSW Government, visa applicants will be required to invest a minimum of 30% (or $1.5 million at the base level of investment) in NSW Waratah Bonds. Q: What are complying investments? Investment in a government bond (however described) of the Commonwealth, a State or Territory. An investment in a managed fund (directly or through an investor directed portfolio service). Investment in a proprietary company that is not listed on the Australian Securities Exchange and that operates a qualifying business in Australia. Q: What is a managed fund in Australia? The Fund can be an unregistered managed investment scheme (MIS), provided the trustee of the fund holds an Australian Financial Services Licence (AFSL), and is able to issue and operate an MIS in Australia. The investment in the fund is made either directly or indirectly through an investor directed portfolio service, and the Fund invests only in specific types of assets. Q: What is a Managed Investment Scheme (MIS)? People contribute money for rights/units (more than 1 person). Contributions are pooled together, and Members don t have day-to-day control. The offer document or Information Memorandum should outline the investment and operation functions of the MIS. The Manager will be required to undertake certain functions each year to comply with state and federal laws in relation to the investment and operation of the MIS, including but not limited to annual accounts, taxation requirements, and member reports. Q: What are the types of assets it must invest into? The MIS to qualify for the holders of an SIV must only invest into; Infrastructure projects in Australia. Cash held by Australian deposit taking institutions. Bonds issued by the Commonwealth or a State or Territory government. Bonds, equity, hybrids or other corporate debt in companies and trusts listed on an Australian Stock Exchange. Bonds or term deposits issued by Australian financial institutions. Real estate in Australia. Australian agribusiness and other ASIC regulated managed funds that invest in the above list of investments. Q: What is the term of the Significant Investor Visa? The SIV operates for an initial term of four years. However, holders can extend their visa term if they satisfy certain requirements (including if they have held complying investments for at least four years and continue to meet the relevant conditions). They will be allowed to extend their provisional visa by an additional two years, with a maximum of two extensions permitted, bringing the maximum total period on a provisional Significant Investor Visa to eight years. Q: What are the advantages to the Significant Investor Visa? For migrants, the SIV has a number of advantages over other types of visas. Successful applicants will be granted the following concessions: No upper age limit. No requirement to meet a points test. A reduced residency requirement of 160 days over four years in order to qualify for a permanent visa. Reduce language requirements

9 From the Federal Government s point of view, this new visa will encourage investment into Australia and boost growth in key areas including real estate, infrastructure projects, financial planning and funds management and administration. Q: How many days must you reside in Australia? To be granted a permanent SIV, the primary visa holder must be resident in Australia for at least 40 days for every year or part year that they have held a provisional Significant Investor Visa. The residence period does not need to be met per year but can be met cumulatively over the time the primary visa holder held the provisional visa. Q: What are the reinvestment requirements if I want to change between complying investments? As the holder of an SIV, you may switch between complying investments as long as the sum withdrawn corresponds with the sum reinvested. Visa holders have a maximum period of 30 calendar days from the date the funds are withdrawn to reinvest in other complying investments. Funds reinvested into a complying investment within 30 days are taken to have been held continuously from the original investment date. Q: Is there a points test or an age requirement for the Significant Investor Visa? Significant Investor visa applicants do not need to satisfy the innovation points test and there are no upper age limits. Q: What is the English language requirement for the SIV Visa? There is no English language threshold requirement for applicants. However, all applicants and any dependents over the age of 18 years old that are unable to demonstrate functional English language ability must pay a second installment of the visa application charge. Q: Can the applicant s family come with them on the Significant Investor Visa? Members of the applicant s family unit can apply to get a secondary visa. A family unit consists of: A spouse or de facto partner. A dependent child of the applicant or the applicant s spouse. A dependent child of a dependent child of the applicant or the applicant s spouse. A relative of the applicant or of the applicant s spouse who does not have a spouse, is usually a resident in the applicant s household and is wholly or substantially financially dependent on the applicant. A relative is defined as a stepchild, grandparent, grandchild, aunt, uncle, niece or nephew, or a step-grandparent, step-grandchild, step-aunt, step-uncle, step-niece or step-nephew. In order to be granted a secondary visa, the applicant s family members must meet relevant character, health and security requirements. Children must have the proper permission to lawfully travel and live overseas, particularly where their parents are divorced or separated. Q: Can the applicant s family who are Secondary Visa holders work and study in Australia? There are no work or study restrictions on secondary visa holders. However, the applicant and their family (as secondary visa holders) will initially hold a temporary visa for a period of at least four years. As this is not permanent residence, this will affect the fees that are paid at university and access to certain positions.

10 7. Questions and Answers continued Q: Are there any restrictions on the applicant s travel to and from Australia? During the four-year duration of the temporary visa, the applicant and their family (who are secondary visa holders) can travel to and from Australia as they please. However, there are minimum residency requirements (40 days per year or 160 days over four years) that will have to be met in order to apply for the permanent visa. Q: Are there any restrictions on the applicant s travel within Australia? There are no restrictions on travel within Australia, but the applicant must reside in the state or territory that nominated them. Q: Can the applicant purchase other property and make other investments in Australia? Yes. The applicant may purchase real estate and purchase and conduct any other business in Australia. Depending on the nature of the investment and the value of the real estate, Foreign Investment Review Board (FIRB) approval may be required. We note that FIRB approval can be restrictive and merely holding a temporary visa will not change this position. Further information in relation to obtaining FIRB approval can be found at Q: If a person makes the required AU$5 million investment but the value of the investment falls below AU$5 million, does the investment need to be topped up to AU$5 million to continue to qualify? No. The visa holder is not required to provide additional funds if the complying investment falls below AU$5 million. On the other hand, if the balance increases, the visa holder cannot withdraw the increased value during the life of the visa. Q: Will an investment in mortgages over real estate fit the criteria of being a complying investment? Direct investment in real estate will not be considered a complying investment. Unless made in an ASIC-regulated managed fund with a mandate for investing in real estate property in Australia. Whether this will extend to an investment in mortgages over real estate as a qualifying asset class for the fund will need to be considered on a case-bycase basis. Q: If an individual wishes to hold a complying investment through a closely owned trust or company, does that trust or company need to be an Australian trust or company? No, the trust or company does not need to be an Australian trust or company. The investor can make the investment by means of a trust, provided that the investor (or their spouse or de facto partner) is the sole trustee. The investor (or their spouse or de facto partner) also needs to be the sole beneficiary. The investor can make the investment by means of a company only if the investor (spouse or de facto partner) holds all the issued shares of the company. Q: Can a Fund that is a complying investment also borrow (including by issuing debt notes) to invest alongside the equity contributed by applicants, provided each applicant invests the required AU$5 million? The Minister for Immigration and Citizenship has specified what constitutes a complying investment and makes no mention on the question of borrowing. This means it does not preclude or disqualify a managed fund that also borrows to invest. A fund that is a complying investment may generally be able to borrow, provided that the borrowing is in connection with a complying investment (eg an investment in Australian real estate). However, the nature and extent of the borrowing will affect the status of the fund. This question will therefore need to be considered on a case-by-case basis.

11 8. Useful Links 9. Partners Austrade: Australian Bureau of Statistics: Australian Government: Australian Securities and Investments Commission: Australian Taxation Office: Department of Education, Employment and Workplace Relations: Department of Foreign Affairs and Trade: Department of Foreign Affairs and Trade: Department of Immigration and Citizenship: Foreign Investment Review Board: Private Health Insurance Ombudsman: In developing a competitive SIV offering Quantum has partnered with the following firms; Lawyers Investment Banks Domestic Banks Public Trustees DLA Piper UBS, Goldman Sachs, Deutsche Bank HSBC, Westpac Bank, National Australia Bank The Trust Company Limited

12 To receive more information or to attend a seminar please go to or call or (Chinese speaking) or to info@quantumgroup.com.au Issued and Distributed by: QSMART Securities Pty Ltd ACN ASFL# info@quantumgroup.com.au Sydney Office: Level 5 Fairfax House Pitt St Sydney NSW 2000 Telephone: (Chinese speaking): Hong Kong Office: Level 8 Two Exchange Square 8 Connaught Place Hong Kong Telephone: Facsimile: Important Notice: This is only an outline of the information that is presented to potential SIV visa applicants. Neither Quantum nor QSMART Securities Pty Ltd guarantees the performance of any investment funds. The information in this document is general only and any forecast figures provided in this document are estimates only and will be fully detailed in the IM given to each investor. Investors should consider their objectives, financial situation and needs in deciding whether to establish, a Fund for the purposes of making a SIV application. No guarantee can be provided that such an application for a SIV will be successful. This information has been prepared without taking into account your objectives, financial situation or needs.