The Foreign Investment Review Board is investigating 195 cases of purchases by foreign investors, which include 24 cases of those who voluntarily flagged their own possible breaches, Treasurer Joe Hockey said in a statement.
Tip-offs from members of the public, suspicious that properties had been purchased illegally using shelf companies and illegal leasing arrangements to hide foreign ownership had led to 40 of the cases under investigation, Hockey added.
"Foreign investors who think they may have broken the rules should come to us before we come to them," he said.
Last month, in a bid to cool soaring property prices, the government announced penalties, such as hefty fines and prison terms of up to three years, for foreign investors illegally buying properties in Australia.
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The new stronger punishments come in response to growing foreign investment in Australian real estate and evidence of abuse of current laws that prevent foreign buyers from purchasing existing homes.
Buyers who come forward before November 30 will be forced to sell properties, but will not face criminal prosecution.
This year, Hockey ordered the Chinese owner of a A$39-million ($30-million) Sydney harbourside mansion to sell the property within 90 days, saying it was bought illegally via a string of shelf companies.
To increase housing stock and spur investment, Australia permits offshore buyers to purchase new homes and apartments.