Edited version of private advice

Authorisation Number: 1052395695164

Date of advice: 21 May 2025

Ruling

Subject: Residency

Question 1

Do you meet the definition of a temporary resident?

Answer 1

Yes.

Based on the information provided to the Commissioner, you are classified as a temporary resident from when you arrived in Australia.

Subdivision 768-R of the Income Tax Assessment Act 1997 (ITAA 1997) outlines specific rules regarding individuals who satisfy the definition of a "temporary resident". Subsection 995-1(1) of the ITAA 1997 defines a temporary resident as follows:

You are a temporary resident if:

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

(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.

You meet the definition of a temporary resident.

Question 2

Are you required to pay tax in Australia on your Australian sourced income?

Answer

Yes.

Based on the information provided to the Commissioner as a temporary resident you are only subject to tax on income you derive in Australia.

Section 768-910 of the ITAA 1997 provides that the assessable income of a temporary resident of Australia includes only income derived in Australia during the income year.

Question 3

Are you required to pay tax on any Country Z sourced income in your Australian tax return?

Answer

No.

Based on the information provided to the Commissioner you are not subject to tax on your foreign sourced income as you are a temporary resident.

Subdivision 768-R of the ITAA 1997 provides an exemption for most foreign income derived by individuals who are temporary residents of Australia for taxation purposes. This exemption is explained in part by the following extract from Paragraph 1.23 of the Explanatory Memorandum to the Tax Laws Amendment (2006 Measures No. 1) Bill 2006:

This Bill makes ordinary income derived from a foreign source during the period the taxpayer is a temporary resident non-assessable non-exempt income. This measure also applies to all statutory income that has a source other than Australia......... on which the taxpayer would otherwise be taxed.

Income that is non-assessable, non-exempt income is not assessable income under the provisions of subsection 6-15(3) of the ITAA 1997.

Section 768-910 of the ITAA 1997 provides that ordinary income (such as interest) and statutory income (except for net capital gains) derived by a temporary resident from sources outside Australia are non-assessable, non-exempt income.

Capital gains or losses made by temporary residents are specifically dealt with by section 768-915 of the ITAA 1997. In simple terms, the effect of section 768-915 of the ITAA 1997 is that temporary residents are subject to the same capital gains tax (CGT) rules as foreign residents. This means that if you are a temporary resident, you can disregard (and therefore exclude from your assessable income in Australia) any gain or loss made from a CGT event that is not taxable Australian property.

Taxable Australian property is defined in section 855-15 of the ITAA 1997.

Rental income and bank interest in foreign countries are not included in the definition of taxable Australian property.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You were born in Country Z.

You are a citizen of Country Z.

You are not a citizen of Australia.

You are not a permanent resident of Australia.

You came to Australia to live and work part-time for the next few years.

You entered Australia on a specific visa.

Your spouse has accompanied you to Australia and entered Australia on a specific visa.

You have purchased an apartment in Australia.

You have a bank account in Australia.

You have a home in Country Z and one of your children is living in it while you are in Australia.

You have several assets in Country Z.

You intend on studying in Australia.

You are not an Australian resident within the meaning of the Social Security Act 1991.

Your spouse is not an Australian resident within the meaning of the Social Security Act 1991.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-15

Income Tax Assessment Act 1997 section 768-910

Income Tax Assessment Act 1997 section 768-915

Income Tax Assessment Act 1997 section 855-15

Income Tax Assessment Act 1997 section 995-1

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).