Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P.)Exemption for Certain Visitors to Australia
Overview
This chapter describes the exemption from the Foreign Investment Fund ( FIF) measures which is available to certain visitors to Australia.
Introduction
The FIF measures aim to reduce the scope for deferral of Australian tax where Australian residents hold interests in foreign entities that fall outside the scope of the foreign source income (FSI) measures.
However, in the absence of a specific exemption, the FIF measures would apply to the offshore investments of short term residents of Australia. It is unlikely that those investments would provide significant opportunity to defer Australian tax. There is also concern that skilled foreign nationals may be discouraged from working in Australia if the FIF measures applied to their offshore investments.
Consequently, there will be an exemption from the FIF measures for natural persons who are visitors to Australia.
The FIF measures will not apply to a natural person who is a resident of Australia for a year of income if all of the following conditions are satisfied:
- he person has a temporary entry permit granted under the Migration Act 1958 ;
- he period of time from the issue date of the current permit until its expiry date is four years or less or where the current permit was issued as an extension of an earlier permit the period of time from the issue date of the earliest permit until the expiry date of the current permit is four years or less; and
- he person is not awaiting the outcome of an application for a permanent entry permit under the Migration Act 1958 .
For the purposes of the above tests, a new entry permit issued under the Migration Act 1958 as an extension of the original entry permit is considered to be an extension of the original permit. [Section 517]