Investor visas complying investment framework announced

Last Friday the Government announced the new complying investment framework for the Significant Investment Visas (SIV) and the soon to be established Premium Investment Visas (PIV), which is due to be implemented on 1 July 2015. As previously reported, nominations for the SIV have closed until 1 July 2015. It is expected that any applicant that wants to be nominated to apply for this visa from now will need to hold the revised balance of complying investments.

The new complying investments for SIV applications must now include:

  • At least $500,000 in eligible Australian venture capital or growth private equity fund(s) investing in start-up and small private companies. The Government expects to increase this to $1 million for new applications within two years as the market responds;
  • At least $1.5 million in an eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the Australian Securities Exchange (ASX); and
  • A ‘balancing investment’ of up to $3 million in managed fund(s) or LICs that invest in a combination of eligible assets that include other ASX listed companies, eligible corporate bonds or notes, annuities and real property.

The measures that will be introduced to further protect the integrity of the programme include:

  • Direct investment into residential real estate is excluded and indirect exposure through investment vehicles is to be restricted to less than 10% of a vehicle's net assets.
  • 'Loan back' arrangements where the investment is used as collateral by applicants are to be excluded.

Also, as of 1 July 2015, Austrade will be able to nominate applicants along with the State and Territory Governments.

A further detail of the new PIV has also been announced. Whereas the SIV entitles someone to permanent visa after investing at least AUD 5 million for four years, the PIV will entitle someone to a permanent visa in only 12 months after investing at least AUD 15 million in complying investments. However, PIVs will be available only at the invitation of the Australian Government with nominations by Austrade. It seems the State and Territory Governments have been excluded the right to nominate but can make referrals to Austrade, who will assess applicants based on “entrepreneurial skill or talent”.

The eligible investments of PIVs also appear to be broader than SIVs and may include philanthropic donations, but where any eligible fund(s) must have no more than 20% of its net assets in cash.

What “entrepreneurial skill or talent” means is anyone's guess at this point. The idea of this programmes was simply to park a lot of money for a visa and it would be expected that should there be a rigorous assessment of skill or talent, potential PIV applicants may be discouraged and simply apply for a SIV or a much cheaper business skills visa, which requires a formal assessment of skill and/or talent.