Australia’s 2026-2027 Federal Budget keeps foreign investment rules unchanged but accelerates approval pathways for low-risk investors, strengthens tax scrutiny in deal reviews, and expands energy and strategic sector incentives.
The government confirmed there are no changes to monetary thresholds, fee structures, or national-security triggers under the Foreign Investment Review Board (FIRB) regime, an Australian government advisory body that reviews proposals by foreign investors to acquire or invest in Australian businesses, assets, or land. However, it will continue reforms aimed at faster processing for compliant, low-risk investors while tightening oversight in sensitive sectors.
The policy shift focuses on operational efficiency rather than rule changes. Foreign investors in non-sensitive sectors can expect faster approvals under a risk-based assessment model, while applications involving critical infrastructure, telecommunications, defence, critical minerals, and data centres will continue to face extended review timelines.
A key change is increased upfront scrutiny of tax arrangements. FIRB will place greater weight on transfer pricing, related-party debt, royalty structures, and profit allocation models during the approval stage, rather than relying on post-acquisition review by the Australian Taxation Office (ATO), the Australian government agency responsible for administering and enforcing tax laws. In some cases, applicants may be required to submit draft Australian tax advice as part of their application.
The government also highlighted continued expansion of its ‘Investor Front Door’ initiative, which coordinates large-scale capital inflows. The program is expected to help facilitate up to $125 billion in potential investment pipelines across priority sectors.
Stronger focus on investor compliance profiles
FIRB is increasingly assessing what officials describe as an investor’s ‘compliance profile’, the cumulative record of tax behaviour, structural integrity, and past approvals. Investors with consistent documentation and aligned tax positions are likely to experience faster processing.
Key factors influencing approval speed now include:
Contemporary and defensible transfer pricing documentation
Annual thin capitalisation compliance, not retrospective adjustments
Alignment between intellectual property arrangements and royalty flows
Strong lodgement history and proactive engagement with tax authorities
Officials say these elements now directly affect both current and future approvals, as FIRB assessments become more cumulative.
Residential property restrictions extended
The Federal Budget also extended the ban on foreign purchases of established residential property to 30 June 2029. The measure, originally introduced in April 2025, continues to restrict foreign buyers to new dwellings and vacant land for development.
Temporary residents relocating to Australia remain eligible to purchase new properties but are excluded from buying established homes under the extended policy period.
Energy and capital incentives expanded
The Federal Budget reinforced Australia’s long-term investment strategy in critical minerals, hydrogen, and energy infrastructure through production tax incentives and targeted co-investment.
Key measures include:
Critical Minerals Production Tax Incentive: 10% refundable tax offset on eligible processing and refining costs across 31 minerals, available from 2027 to 2040
Hydrogen Production Tax Incentive: $2 per kilogram refundable credit for renewable hydrogen projects, requiring a final investment decision by 2030
Commonwealth co-investment: $1 billion for the Boyne Island Aluminium Smelter and $222.6 million for the Whyalla Steelworks
Critical Minerals Strategic Reserve: initial focus on antimony, gallium, and rare earths
The Government said these measures are designed to strengthen Australia’s position in global clean energy and critical supply chains.
Energy market and defence shifts
From 1 July 2027, liquefied natural gas exporters will be required to reserve 20% of export volumes for domestic supply. The policy is expected to affect foreign-owned gas producers and energy-intensive manufacturers reliant on export-linked pricing.
Defence spending will also rise significantly, reaching 3% of GDP by 2033 with $53 billion in new investment over the next decade. Major allocations include undersea warfare capabilities (up to $130 billion), autonomous systems (up to $15 billion), and naval fleet expansion ($77 billion).
These sectors remain under heightened FIRB scrutiny due to national security considerations, even as government spending creates new entry opportunities for foreign investors.
Investment outlook
The Federal Budget signals continuity in foreign investment regulation, paired with tighter tax scrutiny and stronger alignment between industrial policy and capital attraction.
While FIRB rules remain unchanged, approval outcomes will increasingly depend on investor structure, tax transparency, and sector sensitivity. At the same time, Australia is reinforcing long-term incentives in energy transition, critical minerals, and defence manufacturing.
For foreign investors, the policy direction is clear: faster approvals are available, but only for those with robust compliance profiles and alignment with Australia’s strategic priorities.
Last updated: 18th May 2026
About the Author
Aaron Garry is the Managing Director of ABN Australia, where he leads the firm’s strategic growth and client service delivery. A Chartered Accountant with deep local and international experience, Aaron has supported hundreds of global businesses in establishing and growing their presence in Australia. His expertise spans market entry, compliance, and commercial advisory.
Aaron Garry
Managing Director