The Australian Government and Treasury have stated over the years that they welcome foreign investment into the country as they recognise its importance to the Australian economy. In January 2021, major reforms came into force that gave greater clarity on investing in sensitive sectors but also introduced stronger enforcement powers, greater compliance monitoring and a national security test.

In order to navigate successful through foreign investment and the screening of proposed investment to avoid costly mistakes and harsher penalties, it is important to understand the Australian FIRB.

The Foreign Investment Review Board or FIRB

The Australian Treasurer through the FIRB has the power to oversee, review and prohibit foreign investment and their approval must be sought before a foreign person is able to invest in this country. FIRB is there to facilitate investment in this country, but it is important to understand how proposed investments will be screened.

New National Security Test

The Australian government have recognised the community concerns around foreign investment and ownership of some Australian assets. The national security test is one way in which the country can protect its security and strategic interests. As part of this screening process, other agencies such as the relevant national security agency can be consulted as to whether a proposed investment raises any security concerns.

This does not affect foreign persons who invest in non-sensitive sectors but instead, it applies to those who want to buy a direct interest in a sector or investment where that direct interest then raises national security concerns. This test is not dependent on monetary thresholds and applies to both foreign government investors or FGIs, as well as all other foreign persons.

This screening process has a number of measures involved including a mandatory pre-investment notification. In particular, if you are seeking to invest in telecommunications, defence related companies or land, critical infrastructure, data and the national supply chain, you may be screened under the national security test. If you are unsure, seek advice from a professional who will be able to fully guide you through this process and help you understand the Australian FIRB.

National Interest Test

Another form of screening looks at national interests, so investment in companies who are large employers fall under this category. This also includes smaller business with unique assets or those who fall under the “sensitive” criteria. Investments that will improve growth and add capacity or new technology is more likely to be favoured for example.

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Impact on the Economy

Applications will also be screened on the basis of the general impact they could have on the general economy. This includes the level of Australian involvement in the business after foreign investment takes place and the interests of the staff and other stakeholders. The nature of the funding of the acquisition and further down the line, what would be a fair return for the Australian people and how the foreign investor intends to develop the investment will be taken into account.


Screening also involves looking at whether the foreign person or FGI could get control over productions of goods and services in this country and control of market prices. If it looks as though the proposed investment may cause distortion in the current sector, this impact is also considered. While encouraging healthy competition, Australian interests will still be protected. If unsure, seek advice from those who can advise on the Australian FIRB.

Agricultural Sector

Proposed investments will also be screened on the potential effect on land access and use, biodiversity, quality and availability of agricultural resources, employment and prosperity in local and regional communities and agricultural productivity and production.

Integrity of Investor

The character of the investor including the transparent method of doing business is factored into the screening process as well. Checking compliance with Australian law and also the investment policy of the proposed investor is taken into consideration.

Residential Land Investment

The proposed investment will be screened to see if it will lead to an increase in Australian housing stock by at least one new additional dwelling. However, it will also need to meet the overall planning strategies and principles of the local areas.

When undertaking a foreign investment, remember to speak to your investment specialists for the best possible outcome.