The 25 farms of Van Diemen's Land Company in Tasmania make up Australia's oldest and largest dairy operation.

New Plymouth District Council's multi-million dollar deal to sell ownership of Australia's oldest and largest dairy operation to a Chinese company has been approved by the Australian government.

The New Plymouth District Council will now finalise the A$280 million ($307 million) sale of the Van Diemen's Land Company's Tasmanian farms to Moon Lake Investments in the coming months.

Australian treasurer Scott Morrison released his decision on Tuesday afternoon, approving Moon Lake's application to buy the dairy assets held by Tasmanian Land Company Ltd, which includes Van Diemen's Land Company (VDL).

Taranaki Investment Management Limited (TIML) chairman Keith Sutton said they would now promptly proceed with the sale of VDL to Moon Lake.

Council accepted the A$280m binding offer from Moon Lake in November last year, subject only to the approval of the Foreign Investment Review Board (FIRB).

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"The team at VDL would be carrying on business as usual during the contract completion and settlement process over the next few months," Sutton said.

New Plymouth Mayor Andrew Judd said the confirmed sale of the farms was a great outcome for the district.

"Throughout the sale process we have been focused as a council on achieving the best possible outcome for our community. I am delighted we have achieved this," he said.

"Once the sale is completed the proceeds will increase the value of the Perpetual Investment Fund, which exists for the benefit of our community now and in the future."

Morrison did however outline as a condition of the sale that Moon Lake was to be subject to new taxation conditons, requiring it to comply with Australian taxation law, Australian Taxation Office (ATO) directions to provide information in relation to the investment and to advise the ATO if it enters into any transactions with non-residents to which the transfer pricing or anti-avoidance measures of the tax law may potentially apply.

"A breach of these conditions could result in prosecution, fines and potentially divestment of the asset," Morrison said.

Moon Lake owner Lu Xianfeng said they were comfortable with the conditions set and Moon Lake was "committed to investing in VDL to grow the business and increase employment".

VDL milks 18,000 cows over 7000 hectares on 25 dairy farms in northwest Tasmania and produces about 8 million kilograms of milk solids a year.

In its submission to the FIRB, Moon Lake guaranteed all current VDL employees would be offered ongoing employment and had indicated a number of future investment projects which would benefit the Tasmanian economy and create further local jobs.

Moon Lake said it intended to continue the contracts for milk produced at VDL under the same terms and assured there would be no impact on the supply of milk and milk products in Australia.

Lu said the company was also committed to continue working with Australian Federal and State government agencies on a range of farming, Aboriginal cultural heritage and land management conservation issues.

In his decision, Morrison said he carefully considered the national interest test in regards to the sale of VDL, which he noted was currently a "foreign owned company that has always been owned by foreign residents".

The tax conditions in place were part of the Turnbull Government's push to ensure companies operating in Australia pay tax on their Australian earnings, he said.

Moon Lake's submissions regarding continued employment, investment, conservation and heritage considerations were enough to stand firm in his position to approve the sale, Morrison said.