As a private financial advice firm based in Perth, we continue to receive a high number of enquiries from clients migrating to Australia who seek clarification around the investment visa requirements and structuring their financial affairs when they move to the country.
The 188 Business Innovation and Investment Visa allows business migrants to run business and investment interests in Australia or to get involved in entrepreneurial ventures in the country. The increased interest in this visa and the four different streams (188A, B, C and E) can be attributed to several factors, many of which can be linked back to covid and the resultant periods of self-reflection and introspection. There is little doubt that the virus prompted us to reassess our priorities and aspirations. Discussions with clients around these topics have revolved predominantly around family, quality of life and a good work life balance.
Reasons for increased migration
Whilst there is a myriad of reasons why people relocate, we have noticed a few trends over the last few years:
- Family security – this typically includes families who have created wealth, have young children at an impressionable age and are seeking a lifestyle change. They may have concerns around their country of origin’s political stability, future health care standards or career opportunities for their children and are seeking greener pastures.
- Moving closer to children grandchildren – the children have relocated and settled in Australia and the parents are keen to join them and the grandchildren. With one of the best climates in the world, beautiful beaches, a strong healthcare system and the emotional pull to be closer to family, many retirees are relocating to be closer to their families.
- Reversal of the brain drain – those who moved overseas to pursue career opportunities have started their own families and are returning to Australia to be closer to their support group.
The 188 Investment Visa
Those who have created wealth and are keen to relocate, often want to do so quickly and with as little hassle as possible. The 188 Investment Visa is a temporary visa which allows business migrants to stay in Australia for up to five years (with extension options or ) and start a business or conduct investment activity in the country. There are options to extend the visa beyond the initial 5 year term, or to apply for permanent residency with the 888 Visa. There are four different Visa 188 streams with 188A and 188E relating to business innovation and entrepreneur streams respectively. We most commonly encounter Visa 188B and C which require a minimum investment into the country. The investment requirements for Visa 188B are fairly straightforward and clear, whilst 188C has a more detailed investment mandate and needs to be carefully considered.
Significant Investment Visa 188C
This stream is suited to high net-worth individuals who are willing to invest at least $5,000,000 over four years into complying investments within Australia. The funds need to be invested in a specified manner, with a specified minimum exposure to venture capital and emerging companies and the balancing component invested into a wider range of complying investments.
In practice, one often finds that quality complying venture capital funds are hard to find and frequently fully subscribed, so timing can be tricky. These funds are traditionally considered high risk but investors can be well rewarded with the right manager and opportunity.
There is a limited selection of emerging company funds which meet the Significant Investor Visa (SIC) requirements but creating an appropriate blend of these assets can help hedge risk whilst still delivering good returns. We tend to favour active management (as opposed to passive funds) with this particular class of investing.
There are a large number of investments which meet the Balanced Investment requirements, which in itself can be fairly daunting, but an experienced financial adviser will be able to guide you through this selection.
Financial Advice
We have found that the approved funds and the blended investments can lack diversification across the various asset classes and sectors and it is important to consider the overall diversification to ensure that the holistic portfolio meets with your risk tolerance and objectives. Maintaining appropriate levels of exposure to international equities, global infrastructure, fixed income and corporate bonds is crucial to building a well diversified, robust investment portfolio.
Determining where to invest the capital for the 188C Visa requires careful consideration and obtaining considered advice from a financial adviser proficient in this area can provide peace of mind and enhance your risk adjusted returns.
Karen Haarhoff is passionate about building long-term relationships with clients and working alongside them to achieve their financial and lifestyle goals. She enjoys helping clients make informed, confident decisions about their financial affairs and providing both clarity and structure around their financial affairs.