Update on SIVs, PIVs and Complying Investments

The Australian government has finalised changes to the complying investment framework for the Significant Investor Visa (SIV) and the Premium Investor Visa (PIV) schemes. The changes take effect from 1 July 2015.

From 1 July 2015, Austrade and State and Territory Governments will be nominators for the SIV, whilst Austrade will be the sole nominator for the PIV.

 

SIVs

Under the new arrangements, SIV applicants will be required to invest at least $5 million over four years in complying investments, which must now include the following.

  • At least $500,000 in eligible Australian venture capital or growth private equity (AusIndustry registered) 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 eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the Australian Securities Exchange (ASX). Fund managers must have and maintain $100million in firm-wide funds under management (FUM) to offer a complying fund for this category. Managers with less than $100million firm-wide FUM may offer products through a responsible entity (RE) that meets this criteria.
  • 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 (subject to a 10 per cent limit on residential real estate to less than 10% of a vehicle’s net assets). Fund managers must have and maintain $100million in firm-wide FUM to offer a complying fund for this category. Managers with less than $100million firm-wide FUM may offer products through an RE that meets this criteria.

 

 

Previously, investment through the SIV was largely going into passive investments such as 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 now be limited (indirect exposure to residential real estate through investment vehicles is to be restricted to less than 10% of a vehicle’s net assets).

Importantly, though, 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.

 

PIVs

A PIV scheme will operate from 1 July 2015. The PIV will offer a quicker 12 month pathway to permanent residency than the SIV, for those meeting the $15 million threshold. The PIV will only be available at the invitation of the Australian Government, with potential recipients to be nominated by Austrade on approved criteria based on entrepreneurial skill or talent and ongoing benefit to Australia and on character/ integrity check. This scheme will be rolled out over the next year, focusing on attracting a small number of individuals. States and Territories will help identify potential applicants.

A one-page document put out by Austrade dated 15 May 2015 contains more details on complying investments for the SIV and PIV schemes - see here.

 

This guest post is by Patricia Tsang from Sophie Grace (@SophieGracePL). Sophie Grace is a consultancy firm providing legal and compliance services for the financial services and credit industries. Sophie Grace has clients throughout Australia and also service large financial services firms with international offices.

 

ABOUT Patricia

Patricia is Head of Legal at Sophie Grace Legal.  She helps clients to understand their legal requirements, and offers practical, effective and commercially-aware solutions. Patricia specialises in providing legal advice and preparing, reviewing and negotiating documentation for participants in the financial services industry.

About the Author

jeremykl

Cofounder & CEO of BetterWealth (@jeremykwonglaw). Former investment banker turned technology entrepreneur. muru-D alumni (Telstra startup accelerator). Passionated about leveraging technology to provide better financial products & services to consumers. Coffee snob, business book reader, and fitness fan.

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