Venture capital, private equity funds and LICs are the big winners in the final complying investment design for the significant investor visa program, but residential property continues to be excluded.
The government announced the final complying investment design for both the significant investment visa (SIV – at least $5 million) and premium investment visa (PIV – at least $15 million) programs on Friday.
From 1 July 2015, new SIV applicants will be required to invest at least $5 million in complying investments – including at least $500,000 in eligible Australian venture capital or growth private equity funds that invest 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," the statement said.
"At least $1.5 million in an eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the ASX."
Finally, a 'balancing investment' of up to $3 million in managed funds or LICs that invest in a combination of eligible assets which include "other ASX listed companies, eligible corporate bonds or notes, annuities and real property (subject to a 10 per cent limit on residential real estate)".
A statement by Austrade said that previously, investment through the SIV program was largely going into passive investments like government bonds and residential real estate funds.
"Direct investment in real estate has never been a complying investment for SIV and this will not change under the new arrangements. Indirect investment in residential real estate through managed funds will also now be limited," Austrade said.
"Importantly, a SIV holder can still independently invest in residential real estate so long as it complies with foreign investment rules, but this would not count as a complying investment to qualify for a visa," said Austrade.
The government came under fire recently in InvestorDaily for its "lack of consultation" about the decision to freeze the SIV program prior to the changes to the investment framework.
A joint statement by Minister for Trade and Investment Andrew Robb and Assistant Minister for Immigration and Border Protection Michaelia Cash said the new framework reflects "months of extensive consultation".
"The changes to SIV and introduction of a PIV are part of a suite of Government policy initiatives which aim to promote investment, innovation and commercialisation of Australian ideas, research and development which are critical to our economic future," the statement said.
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