The Business of Australia is also Business
Former president Calvin Coolidge of the United States of America is reported to have said “that the business of America is business.” Well Australia means business too as far as recent changes to the business/investor visa program is concerned.
Earlier this month Australia implemented significant changes to its business migration program raising the eligibility threshold for two of the more popular visas namely the business innovation visa and the business investor visa. The reason why they made the changes was simply because they could.
Australia has an annual quota of 13,500 places under its business innovation and investment program and because of oversubscription on the part of applicants the program usually ends well in advance of the end of the immigration year which occurs on one July.
The government has said that the purpose for the change is to support Australia’s post Covid 19 economic recovery but I think that the majority of changes were made to curb the number of applicants.
The number of business and investment categories has been slashed from nine to four, greatly simplifying the choice of visas available. This blog isn’t meant to be a comprehensive summary of all of the changes but focused on the more significant changes as far as our markets are concerned.
Business innovation visa.
This is a five year provisional business visa for certain types of business people who want to buy or establish businesses in Australia. Once your business in Australia reaches certain thresholds you can then apply for permanent residence.
Essentially you need to prepare a business plan and if a state government sees merit in your business proposal they would sponsor you which is one of the prerequisites in order to apply for this visa.
Prior to 1 July you had to be at least a 30% shareholder of a business with a turnover of at least AU$500,000 in two of the last four financial years and net business and personal assets of AU$800,000. This has increased to an annual turnover of AU$750,000 and net business and personal assets of AU$1.25 million.
Certain criteria have to be satisfied before you can apply for permanent residence namely the business has to have been managed for a period of two years and achieved an annual turnover of at least AU$300,000 before you can apply for permanent residence. You would also have to satisfy two of the following three criteria:
- assets of AUD200,000 net value in your main business (or 2 main businesses) in Australia
- personal and business assets in Australia of AUD600,000 net value
- equivalent of at least 2 full-time eligible employees in your main business
If you can’t achieve this in the first five years you could apply for a two year extension to your provisional visa.
Most of our clients operating in markets with stronger currencies (such as Singapore and Hong Kong) wouldn’t be that affected by the increase in the requirements, it’s going to have a more profound effect on some of the markets with weaker currencies such as South Africa.
If you are looking for a more passive business category perhaps the investor category is for you. This is a five year visa for those prepared to invest money in income producing investments in Australia.
Not just anyone can apply, it’s for certain types of business owners or investors managing an investment of AU$2.5 million willing to invest funds in income producing assets in Australia.
Prior to 1 July you had to invest AU$1.5 million over 4 years, but this amount has now increased to AU$2.5 million, although the good news is that the investment now only needs to be held for the duration of the visa – and it’s possible now to apply for permanent residence after 3 years instead of 4 years.
The range of investments has changed from only state government bonds to now:
- at least AUD500,000 in venture capital and growth private equity funds which invest in start-ups and small private companies
- at least AUD750,000 in approved managed funds. The managed funds must invest in emerging companies listed on the Australian Stock Exchange
- a ‘balancing investment’ of at least AUD1.25 million in managed funds
This visa also requires state sponsorship and most states want more than just your investment, they want to be satisfied that you will have further business/investment activity in that state. In other words in part they want your investor acumen.
Perhaps one of the most innovative changes to the business visa program relates to the entrepreneur stream. This is a visa for those start-up and innovative entrepreneurs who have been sponsored by state governments to develop their businesses within the sponsoring state. Prior to 1 July you needed to have obtained funding from an approved entity for at least AU$200,000 but this requirement has been abolished from 1 July this year.
You must be undertaking, or proposing to undertake, a complying entrepreneur activity in Australia which will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or busines in Australia.
You can apply for permanent residence based upon the success of your entrepreneurial activities in Australia and before you ask the question let me hasten to add that investments in residential real estate are not a criteria for this type of visa.
The business visa/investor landscape has been greatly simplified by these 1 July changes and we think that they have been introduced to try and improve the profile of applicant. When you have a product as desirable as Australia and there is an oversupply of applicants you don’t need the pretext of a post Covid lead recovery to increase prices and that is simply what Australia has done.
The majority of our clients and markets in which we operate are not going to be significantly disadvantaged by these changes, to the contrary it provides a more simple and transparent process of qualifying for permanent residence because of business/investory ability.
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