Investor Retirement Visa (Subclass 405) Abolished

The Australian Government has confirmed that the subclass 405 Investor Retirement visa will cease to be available to new visa applicants from the 1st of June, 2018.

Current holders of subclass 405 visas will continue to be able to renew their visas.

According to the Government: “The reason for the closure of the Class UY visa is that the visa no longer aligns with Australia’s economic priorities.”

Visa Subclass 188C – Significant Investor Stream Applicants – Extending Your Stay in Australia

The subclass 188 Significant Investor Extension stream is an option for subclass 188 Significant Investor stream visa holders who have not yet managed to reach the required thresholds for the granting of a subclass 888 permanent residency visa – for example, because the visa applicant has not been in Australia for the required number of days.

To be eligible for an extension of the subclass 188 visa the visa holder must have made – and retained – the investments required for the granting of the original 188 visa, and the visa holder must continue to be the holder of a visa that was granted under the Business Innovation stream of subclass 188.

Documents to be submitted to the Department of Immigration are similar to those required for a permanent residency visa application under the Business Innovation stream of subclass 888, and include confirmation that required investments have been made – and retained – that will enable the granting of the permanent residency visa in due course.

Two extensions of the 188 visa are permitted for those seeking permanent residency under the Significant Investor stream of subclass 888, and if granted the total period the visa holder is permitted to stay in Australia will be extended to:

  • 6 years from the date the initial subclass 188 visa was granted on the first extension, and
  • 8 years from the date the initial subclass 188 visa was granted on the second extension.

Please feel able to contact Go Matilda Visas if you have a subclass 188 visa under the Significant Investor stream and would like to discuss your visa strategy.

Selling a Business and Moving to Australia – Investor Visa Options

Many who are selling an interest in a business would like to move to Australia, and would prefer not to be required to start a business when they arrive.

After owning a business for several years many who are exiting a business would like to relax, enjoy the sunshine and beaches of Australia, and limit physical exertion to an occasional game of golf or tennis!

The Investor stream of visa subclass 188 potentially offers a solution.

The Investor stream of subclass 188 is a provisional visa which allows the visa holder to live in Australia.

Subclass 188 visa holders typically progress to permanent residency after a Designated Investment of A$1.5m has been retained for 4 years.

The general requirements to secure a subclass 188 visa under the Investor stream are discussed here.

For business owners the specific requirements to be met under this stream in addition to the general requirements as to age, net assets, the business visas points test, and making a Designated Investment prior to visa grant are:

  • At least three years’ experience of direct involvement in managing one or more qualifying businesses
  • An overall successful record of qualifying business activity
  • For at least one of the five fiscal years immediately before you are invited to apply for the visa, have directly managed a qualifying business in which you, your partner, or you and your partner combined had an ownership interest of at least 10 per cent

A “qualifying business” is defined as an enterprise that is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public, and is not operated primarily or substantially for the purpose of speculative or passive investment.

Note that in claiming points in the subclass 188 visa points test for business turnover reference is made to the visa applicant’s main business.

A “main business” is defined as one in which the value of the visa applicant’s ownership interest (or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner), in the business is (or was):

  • If the business is operated by a publicly listed company — at least 10% of the total value of the business
  • If the business is not operated by a publicly listed company, and the annual turnover of the business is at least A$400,000 – at least 30% of the total value of the business
  • If the business is not operated by a publicly listed company, and the annual turnover of the business is less than A$400,000 – at least 51% of the total value of the business

In summary, a visa obtained under the Investor stream of subclass 188 removes the obligation to acquire or to set up a business in Australia – and in our experience is a strategy adopted by many current or former business owners who want to move to Australia.

Those who are interested in exploring such a pathway and who would like to discuss their situation more fully are invited to complete the enquiry form on this page.

Visas for Investors: What is a “fiscal year”?

The term “fiscal year” appears generally in the requirements relating to the pathways under visa subclass 188.

For example, under the Investor stream of visa subclass 188 applicants applicants must: “… have owned net assets of AUD 2,250,000 throughout the 2 fiscal years immediately before the applicant is invited to apply for the visa.”

In addition, under the Investor stream: “… if the application is made 3 months or more after the end of the most recent fiscal year, they must complete another Statement of Assets and Liabilities Position for their financial situation as of the date they apply for the visa.”

Migration legisation provides that the term “fiscal year” in relation to a business or investment, means:

  • If there is applicable to the business or investment by law an accounting period of 12 months — that period; or
  • in any other case — a period of 12 months approved by the Minister in writing for that business or investment.

According to the Department of Immigration: “Fiscal years vary in different countries, some countries keep to a calendar year but other countries prefer the tax period to be different to the busy end of calendar year period.

Officers may approve a period as a fiscal year provided it is a 12 month period, and has been accepted as applying to that business/investment for taxation or reporting purposes by authorities in the country in which the business/investment operates and reports.”

In the case of applicants for a visa under the Investor stream of subclass 188 we have found that the Department of Immigration is happy to work with a statement of assets and liabilities prepared to any balancing date, so long as the most recent date is within 3 months of the date of the visa application.

Note: Applicants under the Investor stream are required to prepare a statement of assets and liabilities as at the balancing date, and for 12 and 24 months prior to that balancing date to confirm ownership of net assets of at least A$2.25m throughout the two years prior to the visa application.

The Managing Director of Go Matilda Visas – Alan Collett – is a qualified Chartered Accountant (Australia, and England & Wales) and is a Registered Migration Agent (MARN 0102534), with many years of experience. Fees for visa assistance are fixed in amount, and his knowledge in the areas of accounting, tax (UK and Australia), and visas are highly regarded. If you are a business owner or an investor who wants to move to Australia we look forward to having a free initial discussion.

Designated Investments – How and Where to Apply

Making a “Designated Investment” is a requirement to be satisfied prior to the granting of a visa under the Investor stream of subclass 188, and the subclass 405 Investor Retirement visa.

A Designated Investment is an interest bearing Bond with a 4 year investment term, issued by the Treasury of the State or Territory Government in Australia which has sponsored the visa application.

Subclass 188 visa holders under the Investor stream progress to permanent residency under the Investor stream of subclass 888 once (amongst other requirements) the Designated Investment has reached maturity.

Subclass 405 visa holders do not have a direct pathway to permanent residency, and typically renew their 405 visa prior to the expiry of the presently held 405 visa, with a reduced Designated Investment amount when progressing from an initial 405 visa to a renewal (see below for the amount of the DI).

Interest on the DI is typically paid every 6 months, and from a tax planning perspective it is generally good practice for the DI to be owned by the visa applicant and his/her partner or spouse so the interest is split between the two individuals.

Continuing on the tax theme briefly, it should be remembered that the holder of a visa under subclass 188 or 405 is likely to be a “temporary tax resident” of Australia, and as such it may be – subject to the structuring of the visa holder’s investment assets – that the only income that is taxable in Australia is interest on the Designated Investment.

With a tax free threshold in Australia of A$18,200 there may be little or no tax to pay in Australia – particularly while interest rates on monies deposited are relatively low.

Interest paid on the DI while the visa holder is a tax resident of a country with which Australia has a Tax Treaty (eg the UK) is subject to a withholding tax of 10%.

The interest income may also be subject to income tax in the country in which the individual is a tax resident, with a tax credit available in respect of the 10% withheld in Australia to offset against the local income tax liability.

To review and plan your tax position we invite you to contact GM Tax.

The amount of the DI depends on the visa subclass under which you are applying, and (in the case of a subclass 405 visa) where you will be living and whether you applying for a first visa, or a renewal of a previous subclass 405 visa:

  • Subclass 188, Investor stream – A$1.5m
  • Subclass 405, Investor stream – Initial visa application – Metro area – A$750k
  • Subclass 405, Investor stream – Initial visa application – Regional/low growth area (as defined) – A$500k
  • Subclass 405, Investor stream – Renewal visa application – Metro area – A$500k
  • Subclass 405, Investor stream – Renewal visa application – Regional/low growth area (as defined) – A$250k

The DI is requested by the Department of Immigration immediately prior to the granting of the visa, and is confirmed by the stamping of a form 1031, after the investment has been made by the visa applicant.

Upon receipt of the form 1031 by the Department of Immigration case officer the visa is granted.

The procedures for the making of the DI vary between the States and Territories, and once the request to make the DI is received from the Department of Immigration it is recommended that contact is made with the relevant Treasury to confirm the steps to be taken.

A link to each State and Territory Government Treasury is here:

Sponsorship under the Investor stream of subclass 188, and for the grant of a visa under subclass 405 is not available from the ACT.

For the transfer of funds to Australia from the UK and the USA Go Matilda Visas is pleased to recommend specialist currency transfer firm Moneycorp.