It would also allow Australia to impose travel bans to prevent offenders from using the country as a safe haven.
Foreign Affairs Minister Marise Payne described the laws as an “important reform” that would allow Australia to “define, defend and demonstrate” its values.
“[It’s] a reform that will mean Australia can take timely action - including with like-minded partners … in response to situations of international concern,” she told the Senate.
“Denying the perpetrators and beneficiaries of egregious acts from accessing our economy is essential.”
The Autonomous Sanctions Amendment Bill 2021 will now head to the lower house for a final sign off.
Once passed they would bring the capacity of Australia’s sanction regime in line with democracies such as the US, UK, European Union and Canada.
The vote in the Senate has been welcomed by human rights groups as a “significant step” to promote accountability through human rights, bringing Australia in line with international allies.
Human Rights Watch Australia director Elaine Pearson said the adoption of the “targeted sanctions” regime would “raise the cost of serious human rights violations".
“[This sends] a message to abusive leaders everywhere that there are far-reaching consequences for their actions,” she said in a statement.
“Now, it is up to the government to use these provisions without delay and sanction serious human rights abuses in a consistent, principled fashion.”
The Magnitsky-style laws are named after a Russian whistleblower Sergei Magnitsky who died in a Moscow jail after accusing Russian officials of tax fraud.
That prompted political activist Bill Browder to lead a push for the US Magnitsky Act to be adopted in 2012 on behalf of his former lawyer with the measures later becoming adopted more widely.
The vote in the Senate also marks the long-awaited response to a parliamentary inquiry in December last year recommending Australia also adopt the laws.
Australian Centre for International Justice principal lawyer & executive director Rawan Arraf said the introduction of the targeted sanctions laws were “long overdue”.
“It goes without saying, targeted sanctions should be a tool for protecting against the most serious violations of human rights wherever they occur in the world,” she said in a statement.
“We hope the Australian government will approach the use of this new sanctions power consistently, equally and free from double-standards.”
Labor’s foreign affairs spokeswoman Penny Wong earlier moved to amend the bill to also add serious violations of international humanitarian law to its remit.
She also sought to change the title of the legislation to include Magnitsky-style and other thematic sanctions.
"Magnitsky sanctions will ensure that those responsible cannot seek safe haven for themselves or for their assets in Australia," she said.
Senator Payne replied that the government-supported "both these amendments."
Labor Senator Kimberley Kitching - who has advocated for the laws to be adopted - said the new powers were needed to punish human rights abusers and hold criminals to account.
"In a modern age of regimes run by the dregs of humanity (who) torture and jail and murder their own citizens ... if you believe in the dignity of human beings you can't allow such evil to go on unchallenged," she said.
Liberal Senator James Paterson also said he wanted to see the sanctions regime expanded worldwide so human rights abusers and corrupt foreign officials had nowhere to hide."No longer will (they) be able to comfort themselves with the idea that even if they were sanctioned by our partners, Australia could be a safe haven for their ill-gotten gains," he said.The Greens supported the bill but wanted more transparency around how the laws were applied and to broaden who could make referrals to the minister.
Senator Janet Rice used her speech to detail counts of torture in countries like Myanmar as she justified the need for action.
"Targeted sanctions are a good step, and an important step, in responding to those human rights abuses."
The laws will be reviewed by a joint parliamentary committee after three years.
With additional reporting by AAP.