| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011715823532
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Temporary resident
Questions:
1. Are you a temporary resident for taxation purposes?
Answer: Yes.
2. Are you assessable in Australia on the foreign income you receive from country A?
Answer: No.
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commenced on:
1 July 2007
Relevant facts and circumstances
You are a citizen of country A.
You arrived in Australia and became an Australian resident in the 2007-08 income year.
You hold a special category visa which is a temporary visa.
You are not a holder of a permanent resident visa in Australia.
You receive weekly compensation payments from country A.
These weekly compensation payments from country A are considered a pension for the purposes of the country A's Agreement and are taxable only in Australia.
Relevant legislative provisions
Subsection 6-5(2) of the Income Tax Assessment Act 1997
Subsection 6-15(3) of the Income Tax Assessment Act 1997
Subsection 995-1(1) of the Income Tax Assessment Act 1997
Section 768-910 of the Income Tax Assessment Act 1997
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes the ordinary income they derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Pensions and other similar periodic income replacement payments have the character of ordinary income.
However, subdivision 768-R of the ITAA 1997 provides an exemption for most foreign source income derived by temporary residents of Australia. There is no exemption for Australian source income. This foreign source income exemption for temporary residents applies from 1 July 2006.
Temporary resident
A temporary resident as defined in subsection 995-1(1) of the ITAA 1997 is a person:
· who holds a temporary visa granted under the Migration Act 1958, and
· who is not an Australian resident within the meaning of the Social Security Act 1991, and
· whose spouse is not an Australian resident within the meaning of the Social Security Act 1991.
Under the Social Security Act 1991, an Australian resident is a person who resides in Australia and is either an Australian citizen or holds a permanent resident visa. Taxpayers who hold a protected special category visa and were in Australia on or before 26 February 2001 are also considered to be Australian residents for the purposes of the Social Security Act 1991.
In your case:
· you have a temporary special category visa
· you are not a Australian resident within the meaning of the Social Security Act 1991 because you are not an Australian citizen or hold a permanent resident visa, and
· you do not have a spouse.
As you satisfy the conditions for a temporary resident as defined in subsection 995-1(1) of the ITAA 1997, you are considered to be a temporary resident.
Foreign sourced income
From 1 July 2006, taxpayers considered to be temporary residents will not have to pay tax in Australia on most of their foreign income if they:
· are an individual who is an Australian resident for tax purposes, and
· satisfy the requirements of being a temporary resident.
Section 768-910 of the ITAA 1997 provides that ordinary income derived from a foreign source, excluding employment related income and capital gains on shares and rights acquired under employee share schemes is non-assessable non-exempt income when derived by a temporary resident of Australia.
Subsection 6-15(3) of the ITAA 1997 provides that if an amount is non-assessable non-exempt income, it is not assessable income.
Therefore, as you are considered to be a temporary resident, the weekly compensation payments you receive from country A are non-assessable non-exempt income under section 768-910 of the ITAA 1997. Accordingly, the amount is not assessable under subsection 6-5(2) of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
