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Premium Investor Visa (PIV) offering a more expeditious, 12 month pathway to Australian Residency.

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The new Premium Investor Visa (PIV) will require an investment of $15 million

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PIV holders will be eligible for permanent residency after holding the complying investment for 12 months.

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Wednesday, 22 October 2014

How China's HNWI will fund Australian innovation



Since the introduction of the significant investor visa program in November 2012, close to $2 billion has been invested in Australia. Overseas investors, mostly Chinese nationals, have parked their money in ultra-safe government bonds, blue chip companies as well as real estate, in exchange for their prized Australian residency.

This is a bad deal for Australia. Federal and state governments can sell their bonds easily without this kind of assistance. Australian government bonds have gold-plated credit ratings and offer attractive yields. Similarly, commercial and residential real estate funds and large cap companies also offer good returns and low risk.

“If (the funds) are going to governments, which could be sold anytime and anywhere at a good price, Australia is getting nothing out of it,” Andrew Robb, the Minister for Trade and Investment, told Business Spectator.

“They just park money there for four years and get citizenship. It does not make a lot of sense to me from a public policy point view.”

The Minister is right. Australian citizenship and associated benefits are highly sought after, and channeling investor’s money into mature and low risk areas is a waste of time as well as a lost opportunity for Australia.

The federal government’s new plan is to re-direct these funds from low risk government bonds and real estate trusts to more risky areas such as venture capital and small cap companies that are crying out for capital.

“In those areas, the few hundred million additional dollars invested into venture capital space, for instance, would be transformational. It could make a real difference,” the Minister said.

Australian start-ups have always struggled to get money and many have been forced to seek funding from abroad, including from Silicon Valley. The commercialisation of great Australian inventions like CSIRO’s Wi-Fi, weren’t successful domestically and instead took place abroad.

It is a shame that Australian inventors have to leave the country to make their dreams a reality. The government proposal to channel overseas investors’ funds to the sector is a good move. Canberra is right to capitalise on people’s desire to move to Australia and ask them to contribute to Australia’s economic future by investing in innovation.

I can already hear grumblings from bankers and real estate fund managers about the risks associated with the new proposal.  This may turn away some investors with a lower appetite for risk. But the reality is Australia is one of the few wealthy countries in the world that still retains an investor visa program.

Canada and Singapore shelved their programs and the US just has already reached its quota for the year. So there are not many other options available for investors, especially Chinese investors, who simply want security.

Many Chinese investors see Australia as a safe haven during this period of economic and political uncertainty in China. And you can never charge too much for a life insurance policy.

Saturday, 18 October 2014

Premium Investor Visa takes required offshore injection to $15 million

Premium Investor Visa
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The Federal Government plans to introduce a new visa program, encouraging more high net worth individuals to make Australia home.

It proposes to create a new Premium Investor Visa (PIV) which offers a faster 12 month pathway to permanent residency for those who invest at least $15 million.

Changes are also being planned to the Significant Investor Visa (SIV) program which was established under the Labor government with the aim of encouraging foreign investment.

The SIV gives a pathway to permanent residency for those who invest at least $5 million in Australia for at least four years.

The PIV criteria for eligible investments are also being change so that they align with "the Government's national investment priorities".

These criteria will be determined by the Federal Government's Austrade agency in consultation with the key economic and industry portfolios.

Austrade will also become a nominating body for the SIV.

The PIV will be introduced from July 1, 2015, while the SIV changes will take place during 2014-15.

The targeted investment eligibility criteria will be determined by Austrade following consultation with key economic and industry portfolios.

It is likely the investors will quickly buy an Australian home, with fund manager Roger Montgomery suggesting property prices, at least at the high-end, could well be supported for some time yet.

"Wealthy foreigners often purchase property in Australia as an investment – a trend which has surely exacerbated house price inflation, particularly in Sydney and Melbourne,"

Friday, 17 October 2014

PIV Project Funding

The Significant Investor visa program was introduced in November 2012 and provides a great opportunity for Australian fund managers to promote their managed investment products to high net worth individuals who wish to migrate to Australia.

The new visa rules introduce a simplified pathway to permanent residence for migrant investors who invest $5 million into “complying investments” in Australia for a minimum period of four years. 

Through this scheme we are able to offer approved Developers and Builders in Australia access to development and construction funding through a unique program.

On the 17th October 2014 the government proposed its new Premium Investor Visa (PIV) or $15m Visa.
The PIV would offer a more expeditious pathway for international investors to permanent residency as compared to the existing Significant Investor Visa (SIV).
Under the PIV a 12 month pathway to permanent residency would be available for investors meeting a $15 million threshold in an eligible investment.
At present SIVs are available for applicants making an eligible investment in Australia of at least A$5 million for a minimum of four years.
The Government will further enhance this programme to encourage more high net worth individuals to make Australia home and to leverage and better direct additional foreign investment.
If you have a project that you would like us to review please contact us with more information on 02 8231 6534

Wednesday, 15 October 2014

New $15m Visa - Premium Investor Visa

Advisers have cheered the creation of a $15 million fast track to permanent residency for wealthy foreigners, in a move by the Abbott government to harness Asia’s wealth to boost economic growth and job creation.

They said it puts Australia on the front foot in the competition for rich investors looking to safeguard their wealth in stable offshore markets.

“Australia competes with many countries for high net wealth migrants, making it an attractive prospect is in the national interest,” migration lawyer Alan Rigas said.

The premium investor visa program, announced on Tuesday as part of the government’s competitiveness agenda, gives permanent residency to applicants investing $15 million in certain assets after 12 months.

“The changes can only lead to more investment,” Prosperity Fountainguard Advisers’ Luke Malone said, who led a nine city investor roadshow throughout China in June.

Fountainguard has a second investor delegation currently en route to Shanghai, where it will present to more than 20 individuals looking to invest up to $20 million each. He said the visa, available from July 2015, will be “highly attractive” to this group.

But business migration agent John Findley feared much of this investment will be attracted to property assets. It will drive up prices, which many, including billionaire Lang Walker, said are already inflated by a flood of Chinese developers.

“The likelihood of the $15 million going into property is very real and very high,” said Mr Findley.

INVESTMENT CHOICES TOO BROAD
He said investment choices for compliant funds are too wide and the government should direct it towards infrastructure, or new investment in small and medium businesses.

NSW recently scrapped the requirement for significant investor visa applicants to park $1.5 million into low yield Waratah Bonds.

As part of the changes announced on Tuesday, Austrade will be handed responsibility for drawing up the list of complying investments.

While details are yet to be released, the government has indicated compliant investments will align to five sectors earmarked for growth: food, agri-business, mining technology and services, gas and energy resources, medical technology and pharmaceuticals, and advanced manufacturing.

Latest figures show that to July 1, the federal government has granted 286 significant investor visas, out of a total of 1027 applications, bringing $1.4 billion worth of foreign investment. Most came from China.

The significant investor visa program, which began in 2012, grants permanent residency to foreigners who invest a minimum of $5 million in prescribed assets after four years. A review by the department of immigration found other countries with similar investor visa programs “have less onerous application criteria and processing requirements”.

The government wants to “target premium investors more effectively”, and streamline the administration of the program. It also wants to “diversify the sources of investors” under the program, while maintaining safeguards to ensure it is not abused.


New Premium Investor Visa (PIV) Announced

The Government today announced important changes to the Significant Investor Visa and creation of a Premium Investor visa. 
The new Premium Investor Visa (PIV) will require an investment of $15 million, nomination by Austrade and has no residency requirements.  PIV holders will be eligible for permanent residency after holding the complying investment for 12 months.
Other changes include:
  • the involvement of Austrade in the nomination of applicants on behalf of the Australian Government and in determining complying investment policy
  • allowing 'role swapping' between primary and secondary applicants during the provisional visa stage​
  • introduction of 180 day residency requirements for secondary visa holders​
  • changes to improve visa processing times
The changes will be made progressively through the 2014-15 programme year, with changes requiring legislative amendment expected to come into effect from 1 July 2015.
These changes will not apply to current SIV holders or current applications.
Further information is available in the Department's SIV Fact Sheet and SIV Review FAQ Sheet


Tuesday, 14 October 2014

Premium Investor Visa (PIV), $15,000,000 VISA Federal Government expands investor, 457 visa schemes

The Federal Government is expanding the investor visa scheme and making it easier to hire workers on 457 visas.

The Significant Investor Visa (SIV) program was established under the previous Labor government with the aim of encouraging foreign investment.

The SIV gives a pathway to permanent residency for people who invest at least $5 million in Australia for at least four years.

The Abbott Government is proposing to create a new Premium Investor Visa (PIV) which offers a faster 12-month pathway to permanent residency for those who invest at least $15 million.

Changes are also being planned to the SIV, which the Government says include "streamlining and speeding up visa processing", more promotion of the program internationally and strengthening integrity protections.

The criteria for eligible investments are also being change so that they align with "the Government's national investment priorities".

These criteria will be determined by the Federal Government's Austrade agency in consultation with the key economic and industry portfolios.

Austrade will also become a nominating body for the SIV, complementing the current state and territory governments' role as nominators, and will be the the only body that can nominate applicants for the PIV.

The PIV will be introduced from July 1, 2015, while the SIV changes will take place during 2014-15.

At the same time, the Federal Government has also responded to a review of the 457 skilled worker visa program.

"The Government will streamline the processing of sponsorship, nomination and visa applications to reward low risk applicants and refocus compliance and monitoring activities on high risk applicants," the Prime Minister's office said in a statement.

It will also set English language requirements flexibility with regard to the industry and occupation for the visa applicant and increase the sponsorship approval period for 12 to 18 months for start-up businesses.

However, the minimum wage for 457 visa holders will remain at $53,900, ahead of a review within the next two years.

The Government also said other safeguards will also remain in place.

"It will continue to be a requirement that a foreign worker receives at least the same market rates and conditions that are paid to an Australian doing the same job in the same workplace," it said in the statement.

Monday, 13 October 2014

Premium Investor Visa - Tech entrepreneurs see future value in new industry policy

Australian technology entrepreneurs have said changes to the tax treatment of employee share options, greater investment in science skills and loosening of restrictions on using workers imported on 457 skilled migrant visas, would help level the playing field for startups trying to compete on the global stage.

As part of the government’s “Industry Innovation and Competitiveness Agenda,” released on Tuesday afternoon, previous rules that meant equity issued to employees was taxed at the point of issue, rather than when the options are exercised have been removed. Instead businesses with a turnover of less than $50 million will be able to provide employee share options at a small discount that will not be subject to up-front tax, as long as the employee holds the shares or options for at least three years.

In addition the maximum time for tax deferral has been extended from seven to 15 years, in a move the government said would give startups more time to be competitive and succeed.

Meanwhile following a review of the 457 Visa program, sponsorship approvals will extend from 12 to 18 months for startups, and English language requirements will become more flexible with a new caveat that standards need only be appropriate for the industries and occupations being sought.

As a further move, aimed at increasing the potential pool of investors in local businesses, the significant investor visa (SIV) class will be expanded to encourage more high net worth individuals to move to Australia.

Currently these visas are available for applicants having an eligible investment in Australia of $5 million, for a minimum of four years. Under the plans announced on Tuesday this will be extended to add a new Premium Investor Visa (PIV), offering a more expeditious, 12 month pathway to permanent residency than the SIV, for those meeting a $15 million threshold.

SKILLS ADDRESSED
In a further pillar of the new industry policy the government said it will invest $12 million to improve the focus on science, technology, engineering and mathematics (STEM) subjects in primary and secondary schools across the country.

Co-founder of online retailer Shoes of Prey Jodie Fox said the changes to ESOP rules were a positive move towards alleviating the legislative hurdles put in the way of early stage Australian businesses. She said the move to address educational short-falls in STEM, offered hopes that local startups would eventually not have to fight over scraps when it came to suitably skilled tech staff.

“Australia’s start up scene is teeming with enthusiasm but handicapped by regulatory frameworks. Relieving some of the tax issues around a key point of leverage for new businesses is a big step towards a flourishing ideas economy,” Ms Fox said.

“Improvement in the STEM disciplines along with the alleviating taxation on Employee Shares helps to address both sides of the issue. Firstly, growing technology talent here, and incentivising them to stay.”

The changes to ESOP rules have come too late to save founder of social networking intelligence company Local Measure Jonathan Barouch from spending a high price to establish share schemes under the old regime. However he said the changes had needed to be made for a long time.

He said Local Measure had set up an employee share scheme two years ago, but the system had been so complicated that it had cost $20,000 to get going.

REDUCING COSTS
“In the US, it is possible to buy an off-the-shelf share scheme and have it set up and in place for about $1000. That’s a very big difference when compared to Australia. The changes will level the playing field,” Mr Barouch said.

“The reality is that in Australia we are fighting for global talent. Employee share schemes are an important form of incentive for tiny companies that can’t afford to compete with the large upfront salary packages of multinationals, or more established companies with deeper pockets.”

He said short term cost savings from the new scheme would be very welcome, but he was more enthused by the longer term prospect that more talented youngsters will be encouraged to work for innovative startup companies.

“This impact should not be under-estimated. Some of the talented kids who might instead have gone to work for one of the big consulting firms - or left Australia altogether for Silicon Valley - may now be tempted to stay,” he said. “The changes will make a huge difference among the grassroots of the start-up sector.”

Aside from the 457 Visa changes introduced, Mr Barouch said he had also been hoping for a visa class specifically aimed at entrepreneurs, which he believed would help attract budding innovators, who would rather move to Australia than Singapore or across to the UK.

Co-founder of tech-focused venture capital firm BlackBird Ventures Rick Baker said employee share schemes had become one of Silicon Valley’s core tools for creating hugely valuable businesses. He said he was currently working with startup that was struggling to hire two top people due to its inability to provide a simple employee option plan that didn’t punish the employees with upfront tax.

“Denying Australian startups this tool makes it harder to convince the best people to join our startups and is one of the factors for moving our best businesses offshore. Most of all it denies us the opportunity to spread rewards for success to a wider group of those responsible for it,” Mr Baker said.

“Creating a viable ESOP system for Australia will in fact increase long term tax revenue, as it will foster innovation.”

PREVIOUS FRUSTRATION
Speaking at the Bradfield lecture in Sydney on Monday night, co-founder of high profile Australian tech success story Atlassian Scott Farquhar said the previous share option policy had forced workers overseas.

He said Atlassian had recognised the vital importance of having share-incentivised staff at a startup and had been giving employees options from the start. However he said, due to the system in place, this had cost the company $5.4 million in tax.

“We made it a priority and were lucky that we could afford it, but many other companies are not in the same fortunate situation we were in,” Farquhar said. “It is another disincentive to stay in Australia if you have a tech sector start-up.”

Mr Farquhar also pointed to a shorfall in Australian education as a major headwind on the local tech sector. He said enrolments in tertiary computer science were falling, at the same time as demand for technologically literate workers skyrocketing.

“This lack of university interest probably starts at the school level, where there no uniform national requirement to teach computer and software skills,” he said.