By Lisa De Leon
Both of Australia’s visa categories of the 188 Signficant Investor visa (SIV) and 132 Business Talent visa involve the investment of funds either into complying investments or by establishing a new or existing business. They also include venture capital components and advantages and disadvantages to business owners overseas. Despite the similarities, the pathway to permanent residence is significantly different as are the requirements for each category.
The Significant Investor visa (188C) has no age limit, making it very attractive to high net worth retirees looking to relocate to Australia. The 132 Business Talent visa has two streams – Significant Business History (132A) and the Venture Capital stream (132B). While the Significant Business History stream has an age requirement where the applicant must be under 55 years of age, the Venture Capital stream has no age limit.
Also, there is no language requirement or points test for either category. However, there is an extra visa charge for applicants who do not have competent English skills.
SIGNIFICANT INVESTMENT VISA 188C: RESIDENCY REQUIREMENT
Under the SIV, either the primary applicant needs to live in Australia 40 days per year, which is calculated cumulatively, or their spouse need to spend 180 days per year in the country for the duration of the provisional visa. There are no residency requirement for dependent children. This low residency requirement provides an applicant with the ability to effectively continue running their business in their home country. Applicants don’t need to be a resident for tax purposes, giving the 188C visa holder plenty of time for tax planning and structuring, and arranging the orderly transition of their financial assets to Australia. After four years, if meeting the residency and investment requirements, applicants can apply for a permanent 888 visa.
SIGNIFICANT INVESTMENT VISA 188C: INVESTMENT
Investors must make a complying significant investment of at least 5 million Australian dollars over four years in the following proportions: at least 500 000 Australian dollars in venture capital and growth private equity funds, which invest in start-ups and small private companies; at least 1.5 million Australian dollars in approved managed funds investing in emerging companies listed on the Australian Stock Exchange; a ‘balancing investment’ of at least 3 million Australian dollars in managed funds that may invest in a range of assets, including ASX listed companies, Australian corporate bonds or notes, annuities and commercial real estate. Residential real estate is no longer included as a complying investment.
SIGNIFICANT INVESTMENT VISA 188C: FREEDOM OF MOVEMENT
A nomination from the Australian Trade and Investment Commission (Austrade) can be sought for the SIV rather than a state nomination. The benefit is that there is no state requirement to reside in a nominating state. This is an advantage for families that have not decided on which state is right for them, or where children haven’t yet decided on which university they wish to attend.
SIGNIFICANT INVESTMENT VISA 188C: EXTENSIONS AND MANAGEMENT OBLIGATIONS
The SIV allows for a two-year extension, which can be made twice. The ability to extend the provisional visa may provide a significant international tax benefit to an applicant. Under Australia’s Migration Act 1958, it may be possible for holders of provisional visas to take advantage of the temporary resident rules, which exclude foreign sourced income and gains from Australian tax.
The SIV has no further management obligations to the applicant once the investment is made. The SIV investments are managed by experts who aim to reduce risk by diversification.
132 BUSINESS TALENT VISA: RESIDENCY REQUIREMENT
This is a permanent residence visa. It lets the investor and his family members, who have also been granted this visa stay in Australia indefinitely, work and study in Australia, enroll in Medicare (Australia's scheme for health-related care and expenses), apply for Australian citizenship (if eligible), sponsor eligible relatives for permanent residence, travel to and from Australia for five years from the date the visa is granted. The 132 permanent visas may also be cancelled within three years of the visa holder’s arrival in Australia, if the visa holder has not been engaging in specified activities in relation to an eligible business in Australia in which they hold a substantial ownership interest.
INVESTMENT: 132A SIGNIFICANT BUSINESS HISTORY STREAM
After entering Australia, investors must establish a qualifying business in Australia or participate in an existing qualifying business in Australia. In the business, they must: maintain substantial ownership, maintain direct and continuous involvement in the day-to-day management of the business and make decisions that affect the overall direction and performance of the business in a way that benefits the Australian economy.
The applicant or their partner, or both combined must have total net assets of at least 400,000 Australian dollars as the ownership interest in one or more qualifying businesses for least two of the four fiscal years immediately before getting invited to apply and if the qualifying business was a publicly listed company; a shareholding of at least 10 percent of the total issued capital; net business and personal assets of at least 1.5 million Australian dollars that are legally acquired and can be transferred to Australia within two years after the visa is granted; a total annual turnover of at least 3 million Australian dollars in one or more of the main businesses in at least two of the four fiscal years immediately before invited to apply; ownership of at least 51 percent of a business with turnover of less than 400,000 Australian dollars per year, or 30 percent of a business with turnover of more than 400,000 Australian dollars per year, or 10 percent of a publicly listed company; an overall successful business career.
132B VENTURE CAPITAL STREAM
Applicants must have received at least 1 million Australian dollars in funding from an Australian venture capital firm. This amount is double the Venture Capital investment required for the SIV. The funding must be for the start-up, product commercialization or business development of a promising high-value business idea. The venture capital firm must be a member of the Australian Private Equity and Venture Capital Association Limited (AVCAL). Investors must have entered into a formal agreement with the venture capital firm for the funding. The applicant is required to have a genuine and realistic commitment to continuously maintain an ownership interest and engagement in the applicant’s business in Australia.
An eligible business is defined as a business that the government reasonably believes is resulting or will result in one or more of the following: the development of business links with the international market; the creation or maintenance of employment in Australia; the export of Australian goods or services; the production of goods or the provision of services that would otherwise be imported into Australia; the introduction of new or improved technology to Australia; or an increase in commercial activity and competitiveness within sectors of the Australian economy.
132B VENTURE CAPITAL STREAM: FREEDOM OF MOVEMENT, EXTENSIONS, MANAGEMENT OBLIGATIONS
A 132 Business Talent visa is nominated by a state and territory government, so there is a commitment to operate and maintain your business in that nominating state or territory for a period of two years after visa grant.
This is a permanent visa so extensions are not necessary.
If granted a 132 visa there are significant ongoing obligations. The visa holder will be fully responsible for a single at-risk company. These visas require the applicant to have a genuine and realistic commitment to continuously maintain an ownership interest and engagement in the applicant’s business in Australia.
If immediate permanent residency is the goal and investors are prepared to be actively involved in an Australian business, then the 132A or 132B visa may be the most fitting. The SIV offers a more passive and possibly less risky investment criteria. It suits those who might still have businesses to run back in their home country. The fact that SIV applicants can have a temporary visa for 4, 6 and up to 8 years provides a longer time frame that enables them to continue to run their business in their home country, while enjoying the benefits of the temporary residence tax rules.