On 23 February 2016, the Treasurer issued the following press release confirming his decision to approve the foreign investment application of Moon Lake Investments to acquire the land and assets of the Tasmanian Land Company (TLC), including the Van Diemen’s Land Company (VDL), from the New Plymouth District Council.

The approval was the first to be subject to the tax compliance conditions recently announced.

“VDL is currently a foreign owned company that has always been owned by foreign residents.

In forming my view I have carefully considered the national interest test and how it applies to this case, including the likely impact on local jobs and increased investment to support economic growth. In particular, the national interest test requires consideration of the impact on taxation revenue.

The Turnbull Government is committed to ensuring companies operating in Australia pay tax on their Australian earnings and is committed to ongoing efforts to support this, including through the foreign investment process.

As a result, approval for Moon Lake’s foreign investment application is the first to be subject to new conditions requiring it to comply with Australian taxation law, Australian Taxation Office (ATO) directions to provide information in relation to the investment and to advise the ATO if it enters into any transactions with non-residents to which the transfer pricing or anti-avoidance measures of the tax law may potentially apply.

A breach of these conditions could result in prosecution, fines and potentially divestment of the asset.

The national interest test also considers a range of factors, including national security, the impact on competition, the character of the investor, and the impact on the economy and the community.

Moon Lake Investments have given guarantees that all current VDL employees will be offered ongoing employment with Moon Lake on terms no less favourable than their current employment arrangements. Moon Lake has also committed to undertake a number of investment projects in the VDL farms, which will provide additional economic activity to the Tasmanian economy, and based upon Moon Lake’s estimates will result in a near doubling of employment at VDL. This will guarantee more than 140 local jobs, generate an intended additional investment of over $100 million and an expected additional 95 jobs.

Moon Lake has advised that it intends to continue to supply the milk produced at VDL under the same contractual terms are currently in place. This provides assurance that there will not be an impact on the supply of milk and milk products in Australia. Indeed, the investment that Moon Lake proposes to undertake may result in an increased supply.

The land on which VDL operates has important cultural and natural heritage considerations. Moon Lake has committed to honour the terms of all environmental and cultural agreements entered into by VDL, including with the local Aboriginal community. This also includes the ‘in principle’ approval for construction of a “Devil Proof Fence” at its Woolnorth property to help reduce the spread of Devil Facial Tumour Disease among the Tasmanian Devil population.

Given these considerations, I am satisfied that the Moon Lake proposal to purchase TLC is not contrary to the national interest. It will ensure increased employment and investment in an important industry sector in Tasmania, while the safeguards we have put in place will ensure they pay their tax.

Finalisation of this proposed acquisition is now a commercial matter for the vendors and Moon Lake Investments. I note that the parties have a binding contract to complete the sale that was subject only to FIRB approval, and both parties have indicated that they intend to move quickly to completion.

[Treasurer’s press release] [Tax Month article on Tax Compliance undertakings] [LTN 35, 23/2/16]