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Edited version of your written advice
Authorisation Number: 1051233218226
Date of Advice: 2 June 2017
Ruling
Subject: Overseas Citizens: special category visas remain temporary residents
Question
Is the capital gain on the sale of an overseas real property by an overseas citizen who holds a special category visa as a temporary resident of Australia taxable in Australia?
Answer
No
As the holder of a special category visa (SCV), the Taxpayer is a temporary resident of Australia. Temporary residents of Australia do not pay capital gains tax (CGT) in Australia on the sale of overseas property. As an overseas citizen the Taxpayer is considered to continue to hold a SCV even when they depart Australia and the visa expires, and then return to Australia and are issued a new SCV. Therefore the Taxpayer is not required to pay tax on the sale of their overseas apartment.
The Commissioners view on this is stated in Tax Determination TD 2012/18 Income tax: does a New Zealand citizen who was present in Australia as the holder of a temporary visa granted under section 32 of the Migration Act 1958 (a Special Category Visa) that ceased to be in effect when they departed Australia, still hold a temporary visa for the purposes of paragraph (a) in the 'temporary resident' definition in subsection 995-1(1) of the Income Tax Assessment Act 1997?
This ruling applies for the following period:
1 July 2016 to 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
The Taxpayer is a citizen of Country X who is a temporary resident of Australia and holds a Special Category Visa (SCV) (Subclass 444). The Taxpayer first entered Australia on a date in 20XX with their ex-partner, who is also a citizen of Country X and holds an SCV.
The Taxpayer has departed and returned to Australia on short trips a number of times. Each time they re-enter they are issued a new SCV. The Taxpayer has never applied for permanent residency in Australia.
The Taxpayer divorced their partner on a date in 20XX. The partner has never applied for residence in Australia.
The Taxpayer purchased a residential property in an overseas country in 19XX. This was their main residence until they moved to Country X in 20YY.
The Taxpayer entered into a contract to sell the property on a date in 20XX. The contract settled on a date in 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subdiv 768-R.
Income Tax Assessment Act 1997 s855-10.
Income Tax Assessment Act 1997 s995-1.
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