Australian Immigration Policy Changes post 1 July, 2021

Many countries have developed immigration policies to attract high net worth individuals. In recent years, Australia has also led similar world policies beating out other traditional recipient nations. Australia has recognised that it is wise to continue reforming the framework in a timely manner to remain competitive with the plethora of options afforded to high net worth individuals globally. The changes have been made for the advantages embedded in them for the Australian economy for the long run. Moreover, the reasons for the attractiveness of Australia as a migration destination are apparent. As a stable, safe, multicultural democracy with a robust free-market economy, high living standards, and world-class education, Australia poses a very attractive prospect for migrants; over the other countries.

Moreover, the geographic location of Australia is highly advantageous in attracting migrants from major global markets such as China and India. Many such migrants from China and India maintain significant business interest in Australia. Furthermore, the 2020 Australian baseline investment is below the comparable U.S., i.e., AUD 1,500,000 under Subclass 188B. This commands an investment of over AUD 2,500,000 in many cases. Moreover, under the new reforms, 188B visa requires assets to be made in instruments that help in constituting government bonds. They offer low yield but low risk instead of the more flexible but higher risk investment required under the EB-5 US visa.

The Australian government has recently made changes to the way that migrants can receive permanent residency via investment. From 1 July 2021, the following changes will come into effect.

Premium investment visas, more commonly known as 188d visas, will no longer be available.

Those wishing to apply for a significant investment visa (‘188c’) will still need to invest a total amount of $5M AUD. However, the requirements for how this investment must be made has been changed to the following:

1.?????At least 20% ($1M AUD) must be invested into a venture capital or private growth equity fund, up from 10% ($500K AUD).

2.?????At least 30% ($1.5MAUD) must be invested into emerging companies funds.

3.?????Remaining 50% ($2.5M AUD) can be invested in compliant managed funds. Please note that funds that invest in residential property developments are not a compliant managed fund.

One of the biggest changes to the investment program is the changes made to the investor visa (‘188b’). The amount that needs to be invested has increased from $1.5M AUD to $2.5M AUD, and applicants will need to make this investment as follows:

1.?????At least 20% ($500K AUD) must be invested into a venture capital or private growth equity fund.

2.?????At least 30% ($750K AUD) must be invested into emerging companies funds.

3.?????Remaining 50% ($1.25M AUD) can be invested in compliant managed funds. Again, this does not include funds that invest in residential property developments.

To be eligible for a 188b or 188c visa, you will need to clearly demonstrate that the funds that you are using to make the investment are from legitimate sources (i.e salaries, interest, capital gains, gifts, bequeathments, profits, dividends, sale of properties).

?Business Innovation and Investment Program (BIIP)

Australia’s BIIP has been designed to encourage successful business owners and entrepreneurs to settle in Australia and contribute to Australia's development through their business abilities and skills. The program aims to attract entrepreneurial talents specialising in diverse business activities in the country. Migrants who have repeatedly enjoyed success in building businesses through innovation and investments are the primary target audience of BIIP. The various objectives of BIIP include the following:

·????????Boosting the Australian goods’ and services’ export to other countries

·????????Generation of employment in Australia

·????????Increasing the scope and range of commercial activity and business competition

·????????Strengthening the link between Australia and international markets

·????????Facilitating the implementation of newer technologies

·????????Dispersing migrants possessing entrepreneurial and business skills all over the country through territory-centric and state-centric government sponsorships

Three visa categories are included in BIIP, namely;

1.?????Business Innovation and Investment Permanent Visa (Subclass 888)

2.?????Business Innovation and Provisional Investment visa (subclass 188)

3.?????Business Talent permanent visa (subclass 132), which has two streams;

???????????????????????????????i.???????????Significant Business History Stream

?????????????????????????????ii.???????????Venture Capital Entrepreneurial Stream

BII visa allows the visa holder to own and manage a business in Australia, conduct investment and business activity in Australia, or undertake an entrepreneurial activity in Australia. The Department of Home Affairs had opted to launch a second review following on from a 2017 review of BIIP, entitled “BIIP: Getting a better deal for Australia.” This review entailed an extensive consultation process, with submissions having been accepted up until 14 February 2020. Under the BIIP, Australia has had a high demand, as it had been exceeding the supply before the global pandemic. More than 15.9 billion were invested into the economy of the country since 2012. It is essential to have a look at the following aspects of the Australian BIIP scheme:

1.?????For high net worth migrants, Australia has been the number one destination. The country has experienced increased demand for its BIIP visas which has persistently exhausted annual quotas.

2.?????The recent review of the BIIP scheme of Australia focused on the potential adjustments to investment competition, investment threshold, recalibrating the application of the prevailing points tested systems, and streamlining of pathways.

3.??????For Australian BIIP visas, the United States EB-5 visa may be regarded as the primary competitor.

The Australian BIIP has resulted in more migrants than any other comparable program, despite boasting some of the highest investment thresholds of all investment visa schemes worldwide. Meanwhile, it also enforced some of the most restrictive investment criteria of any nation. It is also clear that in some ways, the US EB-5 visa offers significant advantages to the potential applicants even though the demand for Australian access is substantial. It appears like considerable leeway exists to require more prospective migrant investors. Australia is likely to attract world-beating levels of interest by meeting applicants halfway, permitting them more excellent agency in their investment structure. However, it is essential to monitor the state of this market in order to ensure that the BIIP scheme remains competitive with the offerings of other nations.

Recent Changes to Australian Business Visas

With changes in the prospective visa reforms, the “Getting a Better Deal for Australia” report by Australian Federal Government aimed to investigate ways so that increased benefit can be derived from BIIP. Similar to the case of most migration reforms, results and consequences are of mixed nature. In general terms, the Australian business skills migration scheme is being changed in several key aspects, which has started from July 1, 2021.

·????????Provisional visa validity is extended to five years, where permanent residency permitted after three years.

·????????The program is changed to reduce from 9 to 4 streams, eliminating two streams from subclass 132 visas and many streams of the subclass 188/888 visas.

·????????Scrapping of the funding threshold of the entrepreneur stream.

·????????Elevates the thresholds for some business turnover and asset tests.

Further industry consultation is ongoing regarding the modification of the complying investment framework. It was also noticed that additional changes were announced throughout the first half of 2021. Under the above reforms, changes have shown the need for an extra One Million (AUD 1Million) dollars to obtain a Subclass 188 (B) Designated Investment Visa. It enables the visa holders to live in Australia under a shake-up of migration scheme. The change was broadcasted recently by Alex Hawke, the Immigration Minister, which is predicted to encourage higher quality investments into the local businesses. This was put into effect from 1 July 2021 on confirmation. It might come with a positive variation. The reforms’ change is predicted to shorten the time when investors have to wait before applying and waiting for their permanent residency.

Under the new reforms, some of the streams are excluded. These include Significant Business History, Premium Investor, and Venture Capital Entrepreneur streams. However, applications that have already been lodged by July 1, 2021, are still being processed. Those holding provisional visas in the affected streams will still apply for the corresponding permanent visas. Fewer than five Premium Investor visas were applied, according to the Home Affairs data. Also, less than 20 Venture Capital Entrepreneur applications were made. These applications were made for Premium Investor visas and Venture Capital Entrepreneur visas between 2012 and 2019. Among the three, the Significant Business History stream was slightly popular, for which the applications peaked at 817 in 2017. Those who would have qualified through that stream are also predicted to be eligible through the Business Innovation stream, which has somewhat similar requirements. The other two streams affected after recent reforms include the Significant Investor Extension stream and Business Innovation Extension stream. Currently, both provisional visas are now amended to have the ability to extend without leaving the stream.

With the recent changes, Australia benefits economically as these changes are in line with other reforms to boost the economy of the country after the pandemic. Alan Tudge, acting Minister for Immigration, Citizenship, Migrant Services, and Multicultural Affairs, stated that these changes aim to drive investments in the critical sectors of Australia and create employment opportunities in the country. Australian government doubled BIIP places from 6,862 to 13,500 in the Federal Budget and promised to prioritise the processing of these visas.

Four Streams

The recently changed scheme has consisted of many divergent streams since the introduction of the current BIIP. Each stream with its conditions, requirements, and procedures falling into different subclasses. Among the current streams, two falls in the subclass 132 visa, while the remaining seven streams relate to the two-stage subclass, i.e., subclass 188 and 888 pathways. However, it was thought that the high number of ways might confuse the BIIP scheme unnecessarily. Moreover, it was supposed to lead to underutilisation of less attractive streams. In order to streamline and simplify the business migration, the streams that are closed to new applicants include the following;

·????????Business Innovation extension (subclass 188/888)

·????????Previous Investor (subclass 188/888)

·????????Significant Investor Extension (subclass 188/888)

·????????Venture Capital Entrepreneur (subclass 132)

·????????Important Business History (subclass 132)

The four remaining streams falling under the subclass 188/888 include

·????????Entrepreneur

·????????Business Innovation

·?? ????Investor

·????????Significant Investor

According to the newly designed reforms, the underutilised subclass 132 is no longer be open to new applicants. Similar is approached for the redundant premium Investor stream. More general provisions will facilitate the extension of visas under the Business Innovation and Significant Investor stream as of July 1, 2021, in relation to two extension streams. These extensions are subjected to additional requirements. The extension streams, based on this change, have become redundant and, therefore, effectively abolished.

Provisional Visa Duration and Extension

The provisional visas let the holders to BII provisional visa (subclass 188) significant investor stream holders to extend their stay in Australia for up to four or more than four years. As per the previous policies, visa durations for the subclass 188 visa holders vary from stream to stream. This clause has imparted random variance to the BIIP framework. Moreover, it has compounded the complexity associated with securing a subclass 888 visa. As a part of the July 1, 2021 changes and reviewed BIIP framework, streams falling under subclass 188 conform to the following.

·????????Subclass 188 visa holders can transit to permanent residency through subclass 888 after they have lived three years, after subjection to transitional requirements

·????????Subclass 188 visas are valid for five years, following the date of grant.

With the development of visa durations and timelines to demonstrate the transition consistency across the streams, these reforms add much-needed certainty for the prospective applicants. Moreover, the additional time provided to meet the requirements of subclass 888 is a likewise welcome addition, especially for the streams with no avenue for subclass 188 extension. This extension of 5 years might help the entrepreneurs and business owners actively play their role and benefit the country’s economy. Moreover, with residency permission after three years, provisional visa holders can receive immense benefits. Changes made post 1 July 2021 aim to increase Australia's economic advantage and competitiveness among countries. Moreover, it intends to counteract the setbacks imparted by the COVID pandemic on the Australian economy.

Business Turnover, Asset and Funding Thresholds

The intent to make changes in the visa policies on 1 July 2021 is based on different considerations. Among the core concerns, the main concern was whether Australia could afford to increase the requirements of the BIIP, which was presented in the “Getting a Better Deal for Australia” report. A significant portion of stakeholders indicated reservations regarding restricting eligibility. However, the consensus stated that there is probably some increase that would be feasible unduly curtailing demand for the program. The final report of the “Getting a Better Deal for Australia” has settled on the two prominent changes to the Business Innovation stream;

·??????Applicants must own and operate a business with AUD 750,000 in annual turnover (up from AUD 500,000).

·???????Applicants are required to hold a minimum of AUD 1.25 million in personal assets and business (up from AUD 800,000)

From the changes made in the policies shown above, it can be seen that BIIP reforms implementation makes the requirements under the Business Innovation stream of Subclass 188 increasingly stringent. Applicants looking to avoid these stricter requirements need to act fast, given that many prospective applicants may find themselves ineligible under the new reforms. Moreover, AUD 200,000 funding threshold is scrapped under the Entrepreneur stream of Subclass 188. However, this is likely to be offset by the endorsement requirements of various Territory and State bodies. Furthermore, given the limited historical interest in this stream, it remains to be seen how this change will trigger demand.

Possible Future Changes

The report clarifies that the consultation process remains ongoing, while the changes being introduced in July 2021. Any additional amendment will also be publicised within the time for future applications to make adjustments. It might be critical to watch this space for future updates. Complying Investment Framework is one of the areas of probable reform. Presumably, the reforms are probable to be made in the regulations that mandate these investments' makeup. Based on the comments on the report by the stakeholders, it can be suggested that we may see an increase in the flexibility of investment options permitted under the framework. This can be purely speculative nevertheless a possibility within the foreseeable future.

Further reforms might be seen in other aspects of the scheme while less has been said of other matters. These might include awarding points under the applicable investor stream points test for those applicants investing beyond the prescribed investment threshold. Also, it may consist of those applicant offering points and priority processing in exchange for committing to the regional investment.

The proposed changes, in aggregate, significantly serve to simplify the BIIP process for the applicants and their legal advisors. These changes also trim the fat and reduce uncertainty. With these changes, greater consistency across the streams removes the redundancies, making the program comprehensible for the prospective applicants. With slight adjustments in the eligibility of applicants, the overall reforms serve to benefit-eligible applicants by offering an easy and cleaner pathway for their permanent residency in Australia. Moreover, these changes provide the applicants more time to meet their obligations under the BIIP scheme.

Should our service be required, we can connect you with local service providers, such as business brokers,banks, solicitors, and in the instance of 188B and 188C, the compliant Fund and their fund managers, who would meet your specific needs and help you decide the best investment for you and your family, and those qualified managers would operate compliant funds that meet the requirements for 188b and 188c visas, smoothening up a bit some of the obstacles on the way to settling properly in Australia.

ABOUT the Author:

Richard YUAN (RMA# 0005245) in immigration - Richard arrived in Australia in 1996, and started as an interpreter and translator since 1997, and through many of his immigration related translation work, he learnt the ropes and acquired a immigration practising license after completing his study in immigration in UNSW in 2000, when he started his own business-ABC World Pty Ltd.

He has handled numerous immigration cases, including some of the most challenging ones and he earned his name in 2005 and was able to expand his business to China, covering 6 major cities. His comments and views were often soughted and quoted by many English and Chinese media outlets, about the trend, the policy and the practise in Australian immigration related matter. His specialities are business/investor related migration.

He has orchestrated the "Australia China Enterprenuers Club" (ACE Club), servicing the High Net Worth Individuals since 2007 and he has seen many deal flows through his ACE Club, taking advantagy of immigration, investment and trade opportunities.

#immigration #abcworld #visa #china #investors #venturecapital #balanceinvestment #emergingmarkets

Author's Note: This is an attempt to summarize the recent changes in Australian Immigration Policy Post 1 July, 2021, and the author welcomes all comments and suggestions.