12/08/2021·2 mins to read
New OIO fee regime to take effect from September
UPDATED: 7 SEPTEMBER 2021
- Following a review and consultation process, the OIO fees are set to increase from 13 September 2021.
- The new fees will apply to consents submitted on or following 13 September.
- Sensitive land applications will be based on a two-tiered structure, with higher fees applicable for “complex” consents.
- More details around the new fee regime can be found here.
The complex assessment fee applies to applications received under the benefit to New Zealand pathway which have either five or more “relevant overseas persons” or ten or more “individuals with control”. We are surprised that the criteria to differentiate between simple and complex sensitive land applications relates to the number of overseas persons or individuals with control, we had envisaged complexity to be focussed on the commercial intricacies of a transaction or increased fees for transactions of higher value (aligned with the approach taken in Australia).
We are also not clear how this complex fee structure will sit with investors who have previously completed the standalone investor test. The reduction in fee for the application if you’ve already met the investor test is $12,500, but the differential between the fee for a simple and complex application is significantly more than that. If the criteria relates only to the investor, rather than the investment, we would expect the simple application fee to be available to investors which have already passed the investor test (and we don’t see how the OIO could reasonably justify charging the higher fee). If this analysis is correct, shrewd investors with time up their sleeves could look to meet the standalone investor test at a fee of $25,500, qualifying them for the lower fee range and potentially saving up to $42,400 in application fees.
It is also unclear the thought processes that led to the complex transaction fees only applying to applications involving sensitive land, whereas it is often the significant business assets that involve more complex ownership structures and sophisticated transaction structures.
Transactions that fall within the “national interest” test will have to pay an additional fee of $83,700. Given the national interest test can be applied on a discretionary basis, we hope that this discretion would be utilised cautiously.
These fees are a substantial increase for land based applications and we hope that the statutory timeframes that have not yet been announced but are to come into effect from 24 November, reflect the fees that are being introduced so that these changes together represent greater value for money for investors. The fee review was undertaken by reference to the overseas investment regime in place up until July 2021. The recent changes to the regime have the effect of simplifying the scope of review required by the OIO so we would hope that the door is not shut for another fee review in the short term, with a reduction in fees proportionate to the simplified regime.
Special thanks to Holly McKinley for her assistance in writing this article.