Barun Law LLC, led by attorneys Lee Dong-hoon, Lee Young-hee, and Kim Do-hyung, announced on September 18 that it co-hosted a seminar with the Australian law firm H&H Lawyers on September 17 at the Barun Building. The seminar focused on 'Entering Australia: Investment and Global Asset Transfer Strategies.'
As Korean companies and investors increasingly enter the Australian market, issues such as local corporate establishment, investment structures, foreign investment regulations, real estate investment, and tax and foreign exchange reporting have become more complex. This seminar aimed to address the legal and tax differences between Korea and Australia and to present an integrated strategy covering asset transfer and succession from the contract stage.
Hong Kyung-il, managing partner at H&H Lawyers, discussed 'Trends in Australian Market Entry and Foreign Investment Regulations.' He noted that the number of Korean companies operating in Australia has surpassed 80, expanding from large corporations to medium and small enterprises, particularly in the defense and infrastructure sectors over the past five years. He emphasized that the choice of initial structure—whether to establish a local entity, engage in mergers and acquisitions, invest in real estate projects, or enter through branches or direct contracts—can impact tax, employment, and exit strategies.
He explained that the Foreign Investment Review Board (FIRB) assesses foreign status based on ownership and control structure rather than nationality, indicating that a local entity controlled by a Korean parent company could be classified as foreign. Regarding real estate regulations, he pointed out that from April 2025 to June 2029, foreign acquisition of existing homes will generally be prohibited, limiting eligible purchases to new homes, off-the-plan properties, and vacant land. He advised that investors should consider after-tax real returns rather than just nominal rental income, highlighting that many medium and small enterprises often sign contracts before seeking legal advice. He stressed the necessity of confirming regulations before contracts, as FIRB approvals and surcharges cannot be reversed post-contract. He recommended integrating visa and immigration planning from the outset of business, including corporate establishment, sponsorship, work visas, and permanent residency.
Jo Ok-ah, an attorney at H&H Lawyers, presented on 'Australia's Tax Environment and Investment and Asset Holding Structures.' She compared tax differences with Korea, noting that while Australia does not impose inheritance or gift taxes, transfer taxes and capital gains taxes (CGT) apply during asset transfers. She highlighted that there is no additional comprehensive property tax for multiple property owners. Regarding CGT, she explained that the main residence is fully exempt from tax regardless of the amount or holding period, while investment properties are eligible for a 50% reduction if held for over 12 months. If a primary residence is converted to an investment property, selling it within six years can also result in full exemption.
She also noted that starting in July 2027, negative gearing will only apply to new properties, not existing ones, following a May 2026 announcement. Jo emphasized that the tax residency status and investment objectives differ based on the three asset holding structures: individual, corporate, and trust, advising that decisions regarding holding structures and residency status should be made after consulting with professionals.
Barun partner attorney Jo Woong-kyu addressed 'Global Asset Management and Succession Strategies,' discussing the complexities of 'cross-border inheritance' where the governing law and outcomes vary based on nationality and residency. He explained that, according to Article 77 of the Private International Law, inheritance generally follows the law of the deceased's home country, but real estate is governed by the law of its location, which can lead to a single inheritance being subject to multiple legal systems based on the type of property and the nationality or residency of the deceased. He compared methods of asset succession using inheritance division, wills, and trusts, outlining the advantages and disadvantages of each approach.
He also covered citizenship and permanent residency acquisition and the 'cross-border estate planning' for overseas Koreans. He noted that changes in governing law due to citizenship acquisition can alter inheritance outcomes, and that obtaining permanent residency does not automatically change tax status. He stressed the importance of integrating asset transfer and succession planning before changing nationality or residency.
In the final session, Barun partner attorney Choi Jin-hyuk presented on 'Domestic Regulations Related to Overseas Investment and Asset Transfer.' He explained the differing definitions of residents and non-residents under the Foreign Exchange Transaction Act and tax law, warning that if individuals plan to return to Korea while maintaining family and assets there, they may be considered tax residents even during long stays abroad, subjecting their worldwide income to taxation.
He outlined methods for transferring funds abroad, including foreign direct investment (reporting to designated foreign exchange banks for acquiring over 10% equity or establishing new entities), offshore financial institution reporting (to the Bank of Korea), acquiring overseas real estate (pre-reporting and post-reporting), and procedures for paying relocation expenses. He highlighted the 'exit tax' on domestic stocks deemed sold upon relocation, noting that starting in 2027, this will also apply to overseas stocks exceeding 500 million won, and that individuals must report if their overseas financial accounts exceed 500 million won at any point during the year.
All presenters emphasized that FIRB approvals and foreign surcharges cannot be reversed after contracts are signed, urging that visa, tax, asset structure, and family planning should be integrated from the initial stages of market entry. They advised caution regarding unverified information and recommended consulting with professionals on residency status, holding structure choices, and fund transfer methods.
* This article has been translated by AI.
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