By James Hall
The Business Innovation and Investment program (BIIP) is designed to attract businesses, entrepreneurs and investors to Australia which has been successful with a consistently high demand that far exceeds the number of visas available. This is despite investment thresholds that are significantly higher than many other countries including the United States.
Australia is the #1 preferred destination for high net wealth migrants
Australia has the highest global inflow of migrants with more than 1 million American dollars in wealth with a net arrival of 12,000 in 2019 as reported by New World Wealth. In October 2020, the Department of Home Affairs (DHA) which is the government department responsible for managing the migration program, reported a queue backlog of 30,621 business and investor visas which is more than 4 times the normal annual planning level.
The current program was introduced in 2012 with the entrepreneur stream added in 2016. The program is managed according to the financial year and the current program started on July, 2021 for the 2021-22 year.
The program is an important part of Australia's economic recovery plan from the impact of the global pandemic
Each program year, the national, state and territory governments jointly determine the allocation of nominations to be made available for prospective migrants based upon their regional needs and outlook. In 2019-20 the total planning level was for 6,682 visas, but in response to the pandemic and a need to support economic recovery this has nearly doubled to 13,500 places in the current 2020-21 year.
The provisional visa (subclass 188) is a 4-year temporary visa (actually 4 years 3 months) that allows applicants to engage in business or investment activity in Australia. Upon satisfying investment, business or entrepreneurial requirements in Australia, the application can be made for a permanent residence visa (subclass 888).
The streams within the Business Innovation and Investor program
A set of changes to the program was announced to improve the quality of investments and maximize the economic benefits of the program to Australia. These changes took effect on July 1, 2021.
The temporary visa (subclass 188) now has an increased duration from 4 years 3 months to 5 years, with a minimum period of 3 years required before the application for the permanent residence visa (subclass 888) can be made.
The Business Innovation stream is for applicants who wants to operate a new or existing business in Australia and can demonstrate experience owning and managing a business. The Business Innovation pathway requires a history of owning and managing a business with an annual turnover equivalent of at least AUD 750,000 for any two of the last five fiscal years.
Investor, for applicants who intend to invest AUD 2.5 million in a funds for at least 3 years.
The Investor pathway increased from AUD 1.5 million to 2.5 million in July. The previous investment was in a government bond which yielded very low interest, 0% last year and currently less than 1%. The new investment must be in a structured fund framework which requires an investment of 20% in a venture capital and private growth equity fund, 30% in an emerging company share fund, and the remaining 50% in a balancing fund.
Significant Investor, for applicants who intend to invest AUD 5 million in a specific fund framework for a minimum of 3 years.
Entrepreneur, for applicants who intend to carry out an entrepreneurial activity of an innovative nature in Australia. The Entrepreneur pathway will no longer require a AUD 200,000 funding agreement and instead require applicants to receive an endorsement for the planned entrepreneurial activity.
Applicants must be nominated by a state or territory government in Australia and will be required to meet any additional obligations imposed by that state or territory. For the Significant Investor stream, it is also possible to be nominated by a national government agency, Austrade, which is responsible for international trade promotion and investment attraction.
The Premium Investor visa, where investors were required to invest AUD $15 million and another business visa scheme under subclass 132, which previously allowed direct permanent residence applications, have ceased and are no longer available.
Key requirements of the updated program in Australia
Business Innovation, for ease of reference this is unofficially referred to as 188A, requires the applicant to own at least one and up to two main businesses with ownership interest of at least 30% for a private company, or at least 10% for a public company. The turnover requirement is at least AUD 750,000 for any two of the last four fiscal years. A net asset position including personal and business assets of at least AUD 1,250,000 is also required. Despite the name of this stream, there is currently no visa requirement for the business to be of an innovative nature.
Investor, unofficially referred to as 188B, requires the applicant to invest AUD 2.5 million for at least 3 years in a structured framework with 20% of the funds in a venture capital and private growth equity fund, 30% in an emerging company share fund, and the remaining 50% in a balancing fund. Under this stream the funds must be sourced only from business or investment activities which the applicant has owned and managed.
Significant Investor, unofficially referred to as the SIV or 188C, requires the applicant to invest AUD 5 million for at least 3 years in the same structured frame above for the Investor visa. The funds must be legally sourced or acquired which can include inherited or gifted assets. This stream has no age restriction and also has the lowest physical residence requirements in Australia with a minimum stay of 120 days for the first 3 years.
Entrepreneur, unofficially referred to as 188E, requires the applicant to present an innovative idea for a new (startup) entrepreneurial activity. The specific requirements are yet to be announced and will likely involve a review and endorsement by an industry eco-system service provider such as an incubator or through a government entrepreneur panel.
For all streams except the Significant Investor, the main applicant must be below 55 years of age. An age waiver is possible if endorsed by the nominating state or territory government and is subject to meeting a higher set of requirements as determined by the state or territory.
The Business Innovation and the Significant Investor streams also allow an extension visa (a further subclass 188) to be obtained to extend the duration of the temporary residence period. This is a useful option if the applicant does not yet meet the requirements to qualify for the permanent residence visa (subclass 888).
For applicants who have substantial income sourced outside Australia and intend to be a tax resident of Australia, the Australian tax department has specific provisions to exclude foreign income under temporary visas but not permanent residence visas. This is a major incentive to consider extending the temporary residence period and the extension visa is often used by Significant Investor visa applicants for this reason. A maximum of 9 years is possible under the temporary residence visa by using the extension visa options.
Australia’s new program has no quotas or restrictions by country
As a reflection of the Australian value of equality, Australia has no quotas or restrictions by country in the management of the BIIP program and there is no discretionary decision making preferences for specific groups of applicants over other groups.
All applications are decided upon specific objective criteria that must be met by the applicant to be approved for the specific visa stream. All criteria is mandated under legislation and cannot be waived (unless specifically permitted in legislation). Despite this, there are many complexities and nuances particularly of the underlying policies and instructions that determine how criteria will be evaluated. These policies are not made publicly available but all registered migration agents are required to subscribe to services providing access to this information. The application process will require extensive supporting documentation and understanding of relevant policy.
With a current overall refusal rate of 17% for the Investor visa stream, it is beneficial for future applicants to seek advice from a registered migration agent before proceeding with an application.
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