Edited version of private advice

Authorisation Number: 1051833351244

Date of advice: 30 April 2021

Ruling

Subject: CGT and temporary resident

Question

Can you disregard the capital gain from the disposal of cryptocurrencies while you were a temporary resident?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You came to Australia in 20XX.

You and your ex-spouse had temporary visas.

You and your ex-spouse were temporary residents.

You and your ex-spouse were never previously Australian residents for taxation purposes.

You were granted a permanent visa in 20XX.

You invested in cryptocurrencies.

You disposed of some of your cryptocurrencies and you made a capital gain.

Your cryptocurrencies were held in capital account.

You were not carrying on a business of cryptocurrency investments.

The cryptocurrencies you owned did not represent any membership interests in any entities.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 768-R

Income Tax Assessment Act 1997 Section 768-915

Income Tax Assessment Act 1997 Division 855

Income Tax Assessment Act 1997 Subsection 855-10(1)

Income Tax Assessment Act 1997 Section 855-15

Income Tax Assessment Act 1997 Section 995-1

Reasons for decision

Subdivision 768-R of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the foreign source income (apart from income derived from working overseas) and capital gains of a temporary resident are not taxable in Australia.

Further, section 768-915 of the ITAA 1997 allows a taxpayer to disregard a capital gain or capital loss they make from a capital gains tax (CGT) event if they are a temporary resident when, or immediately before, the CGT event happens provided the capital gain or capital loss would have been disregarded under Division 855 of the ITAA 1997 if the taxpayer were a foreign resident at that time.

A capital gain or capital loss that a taxpayer makes from a CGT event happening in relation to non-taxable Australian property is disregarded under subsection 855-10(1) of the ITAA 1997 if the taxpayer is a foreign resident, or the trustee of a foreign trust for CGT purposes, just before the CGT event happens.

Section 855-15 of the ITAA 1997 provides taxable Australian property includes:

1.    taxable Australian real property

2.    an indirect interest in Australian real property

3.    a business asst of a permanent establishment in Australia

4.    an option or right to acquire any of the CGT assets in item 1 to 3, or

5.    a CGT asset that is deemed to be Australian taxable property where a taxpayer, on ceasing to be an Australian resident, makes an election under section 104-165.

In your case, you disposed of cryptocurrencies while you were a temporary resident, your cryptocurrencies were held in capital account and you were not carrying on a business of cryptocurrency investments. Moreover, the cryptocurrencies you owned did not represent any membership interests in any entities. The cryptocurrency you hold does not meet the definition of taxable Australian property.

Accordingly, you were a temporary resident who disposed of non-taxable Australian property and the capital gain or loss you made from the disposal would have been disregarded if you were a foreign resident.

Therefore, you can disregard the capital gain you made from the disposal of your cryptocurrencies.

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