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Edited version of private advice
Authorisation Number: 1051811784705
Date of advice: 02 March 2021
Ruling
Subject: Temporary residency and foreign source capital gains
Question 1
Are you a temporary resident of Australia for taxation purposes?
Answer
Yes.
Question 2
Are you required to declare foreign source capital gains in your Australian tax return?
Answer
No.
This ruling applies for the following period:
Year ending 30 June 2021
The scheme commenced on:
1 July 2020
Relevant facts and circumstances
You hold a visa.
You are contemplating selling a property overseas.
You and your spouse are not residents of Australia for the purposes of the Social Security Act 1991.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 768-910
Reasons for decision
Temporary residency
You are a temporary resident if you:
- hold a temporary visa granted under the Migration Act 1958
- are not an Australian resident within the meaning of the Social Security Act 1991, and
- do not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
The Social Security Act 1991 defines an Australian resident as a person who resides in Australia and is an Australian citizen, the holder of a permanent visa, or a protected special category visa holder.
In your case, you are not an Australian resident within the meaning of the Social Security Act 1991 as you are not an Australian citizen, the holder of a permanent visa, or a protected special category visa holder.
In your case you are a temporary resident because:
- you hold a temporary visa granted under the Migration Act 1958
- you are not an Australian resident within the meaning of the Social Security Act 1991, and
- You do not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
Foreign source income
From 1 July 2006, those taxpayers considered to be temporary residents do 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 Income Tax Assessment Act 1997 (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) and is exempt from income tax in Australia when derived by a temporary resident in Australia.
Therefore, as you are a temporary resident of Australia for taxation purposes, any foreign sourced capital gains you derive will be exempt from income tax in Australia under section 768-910 of the ITAA 1997.
This income is not required to be declared in your Australian income tax return.
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