Understanding the 188 Investment Visa’s
As a private advice firm we have had a higher than normal level of enquiry with regards to clients migrating to Australia and the confusion around various Investment Visa options.
I am talking specifically about the 188a, b, c, d and e visa’s.
Before I talk about the Investment visa requirements, let’s take a step back as to why the sudden increase in enquires into these visa classes. It goes without saying that COVID-19 has done a lot of things to change and shape the community and world in which we live. People have re-set their life aspirations, had real discussions about family, money and work and have had open and frank conversations about what really is important to them. Ultimately, we have found that these conversations with our clients have generally revolved around family, quality of life in a social sense and a fair work life balance. This conversation is not unique to us in Australia, people are talking about this with their families and trusted advisers around the globe – it has taken a pandemic for us to shift our Maslow Hierarchy thinking.
So what does this have to do with this Australian Influx we are seeing – we are finding there are a few stand out reasons for this trend:
- Brain Drain reversal – we all had friends after university that travelled or took that promotion overseas to further their careers never came back…they ended up meeting their partners in London or New York and have built a life there for themselves This is where we are finding “the smarts” are coming back to Australia, into sectors, finance, technology, biotech etc – this is all great stuff for Australia’s future.
- Family Security seeker – I link this to the family with money, have grown up in Europe, Hong Kong or in the Africa’s, have run successful businesses, still have kids of an impressionable age and want a lifestyle change. Concerns around political instability, health risks and future standards of living for the kids all come into the equation. In a more connected world people are now realising that they have many choices and there may be better options.
- Retirement Dreamers – so your kids have left the family nest and have made a mark for themselves around the world, they may have already moved to Australia to create a new life. Mum and Dad are left alone, holidays are a distant memory, you miss the kids but use the excuse of seeing the grandkids as the lever to have a life style change. A new healthy life, to enjoy the blue skies and endless beaches…and have no COVID (touch wood).
Whether it is the brain drain reversal, the flight for family security seeker or the retiree dreamers, in all cases money is needed to make the move, and they want to do it quickly and with the minimum amount of fuss….step in the Department of Immigration and the 188 Investment visas.
The common classes that we most with, are the 188b, 188c and 188d range that require a minimum amount of funds to invest, (188a and 188e refer to business Innovation and entrepreneur streams). The Investment Visa 188b is fairly easy to navigate and is quite prescriptive in its investment requirements. Conversely 188c and 188d have a more detailed investment mandate requirement that needs to be worked through on a case by case basis, and advised in a careful and considered manner. Our experience has shown that it is “not a case of one size fits all”.
Without giving too much away and ensuring we are not bordering on providing any financial advice, I would like to focus on the Significant Investment Visa 188c – as we find creates the most confusion in the three level mandates. In our planning with clients we like to overlay a fourth in our discussions, which we call the “Umbrella Layer”.
As it stands the financial requirement through this class of 188c SIV is to invest $5m split as follows: 10% into venture capital, 30% into emerging companies and the final 60% as a balancing investment across a wider range of complying investments. In quality we find that the funnel opens as you progress, good complying Venture Capital funds are not only scarce but quite often there is a timing issue – good funds fill quickly, and although there is an extended investment window for this mandate, this is the high-risk option. The returns can be good for the right mix of manager and fund, so understanding the investment scope is important. Emerging Company funds are limited that comply with the SIV rules, but saying that a blend of them can create good long term returns. We believe active fund management is the key to the success of this Investment class. Finally we have the Balancing Investment sphere, which although plentiful, does lack sufficient diversification across some asset sectors. This is where the Umbrella Layer discussion becomes important to help reduce investment diversification risk and ensure the required outcomes are within the risk tolerance of the family.
What can the Umbrella layer look like? We use this strategy to allocate other assets that have been missed under the first three mandates – it can cover areas such as international equities, global infrastructure, direct cash, fixed interest and the corporate bond market – all the things that you need to keep your appetite for risk in check.
Further reading on this is plentiful: I find the Government’s Immigration and Border Protection release and the Migration (IMMI 15/100 Complying Investments) Instrument 2015 useful, however nothing will replace a personalised discussion about your specific situation, and of course, appropriate and considered advice from a financial adviser proficient in the SIV area.
Private Client Adviser