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Edited version of your private ruling
Authorisation Number: 1012416360300
Ruling
Subject: assessability of foreign sourced income whilst a temporary resident of Australia
Questions and answers
1. Is the income you earned prior to gaining permanent residency in Australia assessable in Australia?
No.
2. Is any capital gains tax (CGT) payable on becoming an Australian resident?
No.
3. Will the CGT rules apply to the future disposal of any CGT assets held by you when you became an Australian resident?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
The scheme commences on:
1 July 2012
Relevant facts and circumstances
You entered Australia in early 2008 on a temporary resident visa and departed on several days later, this was the only time you had been to Australia prior to entering in 2009.
You entered Australia on a temporary resident visa in mid 2009 and recently obtained a permanent residency class visa in 2012.
You accumulated a significant amount of wealth before you received your permanent residency status from asset accumulation and foreign source income.
Relevant legislative provisions
Section 6-15 of the Income Taxation Assessment Act 1997
Section 768-910(1) of the Income Taxation Assessment Act 1997
Section 995-1 of the Income Taxation Assessment Act 1997
Provision 30(2) of the Migration Act 1958
Provision 7 of the Social Security Act 1991
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Section 6-15 of the Income Taxation Assessment Act 1997 (ITAA 1997) provides that an amount of non-assessable non-exempt income is not included in your assessable income.
Section 768-910(1) of the ITAA 1997 states that ordinary income that you receive after 1 July 2006, from a non-Australian source when you are a temporary resident, is non-assessable non-exempt income.
Section 995-1 of the ITAA 1997 defines a temporary resident as:
1) a holder of a temporary visa granted under the Migration Act 1958, and
2) you or your spouse are not Australian residents under the Social Security Act 1991.
Provision 30(2) of the Migration Act 1958 provides that a temporary visa is a visa which allows you to remain in Australia during a specified period.
Provision 7 of the Social Security Act 1991 defines an Australian resident as a person who resides in Australia and is either an Australian citizen or holds a permanent visa.
Becoming an Australian resident
When you become an Australian resident (other than a temporary resident), you are taken to have acquired certain assets at the time you became a resident for their market value at that time.
This does not apply to assets you acquired before 20 September 1985 (pre-CGT assets) and assets that were taxable Australian property.
When you became a resident, the general cost base rules apply to any CGT assets that are taxable Australian property.
Application to your circumstances
You entered Australia in 2009 on a temporary resident visa, you satisfied the requirements of being a temporary resident from this time until you became an Australian citizen in 2012.
Your foreign sourced income from when you arrived until you received your permanent residency is classed as non- assessable non- exempt income and you are not required to include this income in your income tax return.
From the date you were granted a permanent visa, you ceased being a temporary resident and you have to include all income, sourced in and out of Australia, in your income tax returns.