Edited version of private advice

Authorisation Number: 1052302448291

Date of advice: 13 September 2024

Ruling

Subject: Resident of Australia for taxation purposes

Question

Are you a temporary resident of Australia as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

This ruling applies for the following period:

Income year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Country X.

You came to Australia on a date (Date 1) that was significantly earlier than 26 February 2001. You did not hold a visa at that time.

You were a resident of Country X for tax purposes prior to coming to Australia.

Your spouse, Person A, and your children are also Country X citizens.

Person A travelled to Australia on a Country X passport, also arriving on Date 1.

During the 1990s Country X arrivals in Australia were required to travel under a visa and you remained in Australia under a Special Category Visa.

You and Person A were both in Australia on 26 February 2001, with you being the holder of a special category visa on that date.

You reside in Australia, maintaining your Country X citizenship, but do not hold a permanent residence visa.

You currently hold the following that will expire several years after the end of the ruling period:

•                     a special category visa; and

•                     a Country X passport.

Person A also holds a special category visa and maintains their Country X citizenship.

Neither you nor Person A are Australian citizens nor have either of you applied to become permanent residents of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 995-1(1)

Migration Act 1958 subsection 30(2)

Migration Act 1958 section 32

Social Security Act 1991 subsection 7(1)

Social Security Act 1991 subsection 7(2)

Social Security Act 1991 subsection 7(2A)

Reasons for decision

Temporary resident of Australia for taxation purposes

A person may be a temporary resident of Australia for taxation purposes irrespective of whether they are a resident or a non-resident under the normal tax rules. However, a person will not be a temporary resident if they are a resident under the separate tests laid down in the Social Security Act 1991.

Subsection 995-1(1) of the ITAA 1997 defines a temporary resident as:

You are a temporary resident if:

(a)          you hold a temporary visa granted under the Migration Act 1958

(b)          you are not an Australian resident within the meaning of the Social Security Act 1991, and

(c)          your spouse is not an Australian resident within the meaning of the Social Security Act 1991

However, the definition excludes a person who, at any time after 6 April 2006, has been an Australian resident for tax purposes and for whom any of paras (a), (b) and (c) above are not satisfied.

The tests in paragraphs (b) and (c) are applied to ensure that holders of temporary visas who nonetheless have a significant connection with Australia are not treated as temporary residents for the purposes of this Act.

The definition was enacted by Tax Laws Amendment (2006 Measures No. 1) Act 2006 (amending Act) and commenced at the time that the amending Act commenced. As per section 2 of the amending Act it commenced on the day it received Royal Assent, that is 6 April 2006.

As outlined above, the temporary resident test includes the following:

Holder of a temporary visa under Migration Act 1958

A temporary visa is defined in subsection 30(2) of the Migration Act 1958. Section 30(2) states that a temporary visa is a visa to remain in Australia:

(a)          during a specified period

(b)          until a specified event happens or

(c)          while the holder of the visa has a specified status.

Section 32 of the Migration Act 1958 relates to a class of temporary visas known as 'special category visas' for Country X citizens.

Not an Australian resident within the meaning of the Social Security Act 1991 (SSA)

Under subsection 7(2) of the SSA an Australian resident is a person who:

(a)          resides in Australia; and

(b)          is one of the following:

                           i.                an Australian citizen

                           ii.                the holder of a permanent visa

                           iii.                a special category visa holder who is a protected SCV holder.

Subsection 7(1) of the SSA states that 'a protected SCV holder' has the meaning as provided in subsections (2A), (2B), (2C) and (2D).

Under subsection 7(2A) of the SSA, a person is a protected SCV holder if:

(a)          the person was in Australia on 26 February 2001, and was a special category visa holder on that day, or

(b)          the person had been in Australia for a period of, or for periods totalling, 12 months during the period of 2 years immediately before 26 February 2001, and returned to Australia after that day.

Application to your situation

You are a citizen of Country X who came to Australia many years prior to 26 February 2001 without a visa. You are not an Australian citizen, nor have you applied to become permanent residents of Australia. With the introduction of the universal visa system in 1994 you were required to obtain special category visas (SCVs) in relation to your stay in Australia.

We have taken the following into consideration when determining whether you are a temporary resident of Australia for taxation purposes:

•                     You hold a temporary visa granted under the Migration Act 1958. Therefore, you have satisfied condition (a) in subsection 995-1(1) of the ITAA 1997; and

•                     You were in Australia on 26 February 2001, holding a SCV at that time. Therefore, you are a protected SCV holder under subsection 7(2A) of the SSA and thus a resident of Australia under subsection 7(2) of the SSA.

As you are an Australian resident within the meaning of the SSA you do not satisfy the required condition to be a temporary resident under paragraph 995-1(1)(b) of the ITAA 1997.

Note: Based on the information provided it appears likely that Person A was also a SCV visa holder on 26 February 2001. If so they would also be an Australian resident under section 7(2) of the SSA and you would not meet the required condition under paragraph 995-1(1)(c) of the ITAA 1997 to be a temporary resident.

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