Authorities said Ali meant to shoot and "kill as many people as he could" in Federation Square on New Year's Eve, one of Melbourne's most popular areas, Deputy Commissioner Shane Patton told ABC.
Ali Khalif Shire Ali, 20, from Werribee, Victoria, was arrested on Synnot Street on Melbourne's outskirts by officials of Victoria police, the Australian Federal police and the Australian Security Intelligence Organisation (ASIO) around 3 p.m. local time Monday (11 p.m. EST Sunday).
Patton said that the suspect did not access any firearms but had gained access to literature produced by the Islamic terrorist group al-Qaeda which acts as a guide book on how to commit acts of terror.
Patton said the suspect was born in Australia to Somali parents and had been monitored by police as a "person of interest" since January.
The arrest is also not linked to to any previous operations, police said.
He is now being interviewed by police in relation to offences of act in preparation to commit a terrorist attack and collecting documents to facilitate a terrorist act, and is expected to be charged once the interview process has concluded.More news: Cyber Monday: Shopping via mobile devices expected to drive sales today
The plot was the 14th that police say they had disrupted since the terrorist threat level was raised.
The man was believed to be planning the New Year's Eve attack on his own and police are investigating how he became radicalized.
The man worked part-time at a computer fix business and police raided the facility.
The 20-year-old was detained in a raid on a house in the Melbourne suburb of Werribee yesterday and was being questioned.
Police said he would be charged Tuesday with terrorism offences, which carry a maximum penalty of life in prison. He is still being interviewed by a joint police counter-terrorism team.
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