Australia's latest Foreign Investment Review Board (FIRB) reforms could reshape the foreign investment approval process through broader exemptions, faster approvals and enhanced enforcement. We examine the key proposals and implications for investors.

Substantial reforms to Australia's foreign investment framework were announced as part of the 2026-27 Australian federal budget. The latest package has been unveiled against a backdrop of reforms first announced in 2024, which sought to streamline approvals for lower-risk investments while increasing scrutiny of transactions involving sensitive sectors (see our blog post here). Building on those reforms, the 2026 package seeks to reduce regulatory burden for lower-risk investments while strengthening oversight and enforcement in higher-risk cases.

In this update, we examine key aspects of the reform package, recent FIRB statistics and the Northern Minerals divestment orders – illustrating how Australia's foreign investment framework is becoming simultaneously "stronger where risks are high and much faster where risks are low", as described by Treasurer Dr Jim Chalmers.

Better: reducing friction for low-risk investors

A central theme of the reforms is ensuring that regulatory effort is directed towards transactions that genuinely warrant scrutiny.

One of the most significant proposals is the expansion of the existing exemption certificate (EC) regime. The Australian Federal Treasury (Treasury) is proposing to issue broader ECs that could switch off or adjust concepts such as foreign government investor status, tracing and associate rules.

Decisions on whether to grant these broader ECs will be made on a case-by-case basis, taking into account an investor's governance arrangements, character, compliance history and the sensitivity of the proposed investment. Conditions may be imposed to manage risk where necessary. Treasury has indicated that the fee structure will reflect the significant value these broader ECs may provide, including a substantial reduction in the number of applications required during the life of an EC.

The reforms also seek to reduce approval requirements and reporting obligations for lower-risk transactions. Treasury has proposed a range of targeted exemptions, including for small increases in existing holdings that do not result in a change of control, certain intra-fund restructures, and land subdivisions and amalgamations where ownership does not change. Significantly, the reforms also contemplate increasing the monetary threshold (currently AU$347 million) for private investors from non-free trade agreement partner countries investing in non-sensitive sectors, reducing the number of transactions requiring FIRB approval.

While exposure draft legislation has not yet been released, Treasury has indicated that the tracing rules will be amended to focus screening on circumstances where upstream entities hold material interests or exercise meaningful control. This would remove notification and reporting obligations that can currently arise for upstream entities with only limited economic interests or influence, while preserving the ability to review transactions where an investor subsequently acquires a direct interest that materially increases its level of control or influence. Transitional arrangements are expected to address transactions that straddle commencement of the reforms.

Treasury has also proposed reducing duplicative reporting obligations between FIRB applications and the Register of Foreign Ownership of Australian Assets. Once implemented, reporting would continue only for specified asset classes, including agricultural land, water interests, certain mining interests and residential land, reflecting a broader effort to reduce compliance burdens for investors.

Faster: a continued focus on approval timelines

From 1 January 2027, Treasury intends to process qualifying low-risk applications within 30 days. Eligibility for the fast-track pathway will be subject to a range of criteria, including that the investor has received foreign investment approval within the previous 24 months, has no record of non-compliance or character concerns, and is undertaking a straightforward investment in a non-sensitive sector with no national interest sensitivities.

The Government's focus on speed is already reflected in Treasury's most recent quarterly reporting. For the quarter ending 31 March 2026, FIRB approved 311 commercial investment proposals with an aggregate value of AU$79.7 billion, up from AU$68.2 billion in the previous quarter. Processing times also remained efficient with a median assessment period of 35 days and 46% of commercial proposals decided within 30 days.

Stronger: enhanced powers for higher-risk investments

Alongside streamlining measures, Treasury has proposed a range of reforms intended to strengthen Australia's ability to identify and address higher-risk foreign investment. These include enhanced anti-avoidance provisions, expanded visibility of ownership structures and strengthened compliance and enforcement tools. Specifically, Treasury proposes to expand the definition of associate relationships to capture additional persons capable of exercising influence, including direct interest holders and persons whose debt arrangements may confer influence or control. The reforms also seek to address non-ownership forms of control that may give rise to national security concerns, such as certain offtake and financing arrangements.

Harder: the Northern Minerals reminder

The Northern Minerals divestment action provides a timely reminder that foreign investment regulation extends well beyond the initial approval process, demonstrating the Government's willingness to require divestment where an investment is considered inconsistent with Australia's national interest or national security objectives.

Earlier this year, the Treasurer issued disposal orders requiring six foreign investors to divest approximately 17.6% of the shares in Northern Minerals Ltd, following concerns that earlier divestment requirements had not resulted in interests being transferred to genuinely unrelated third parties. The orders build on earlier disposal orders issued in June 2024 requiring five China-linked investors to divest a combined 10.4% interest in the company.

The matter has also resulted in some of the most significant enforcement outcomes under Australia's foreign investment framework. Earlier this year, the Federal Court imposed A$14 million in penalties against investors who failed to comply with the 2024 disposal orders, marking the first enforcement action of its kind under Australia's foreign investment regime.

Looking ahead

The latest reforms highlight the interplay between streamlining approvals for lower-risk investments and strengthening oversight of transactions that raise national security concerns.

Investors should watch closely how the legislative detail develops and operates in practice. Attention should also turn to Treasury's review of conditions attached to existing foreign investment approvals, which commenced on 1 July 2026 and will initially focus on tax conditions. Treasury has indicated that conditions may be updated or removed where they overlap with other regulatory regimes or impose disproportionate reporting burdens. Investors will have opportunities to engage with the review, with Treasury expected to provide further details during July 2026.