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Edited version of your written advice
Authorisation Number: 1051498285038
Date of advice: 26 March 2019
Ruling
Subject: Assessable income – non-resident interest income
Question
Are you as a non-resident subject to income tax on the deposit transferred from overseas bank accounts into an Australian bank account?
Answer:
No
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You are a non-resident of Australia for tax purposes.
You hold funds in bank accounts in countries A and B.
You will convert the funds into Australian dollars.
You will transfer the funds into an Australian bank account by the 30 June 20XX.
You will be a non-resident of Australia at the time of transferring the funds into your Australian bank account.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Subsection 6-5(3)
Reasons for decision
It is the residency status of a taxpayer (rather than citizenship) that determines if and how much they will be taxed on their income for Australian income tax purposes.
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
However, under subsection 6-5(3) ITAA 1997 its states
If you are a foreign resident, your assessable income includes:
(a) the * ordinary income you * derived directly or indirectly from all * Australian sources during the income year; and
(b) other * ordinary income that a provision includes in your assessable income for the income year on some basis other than having an * Australian source.
Interest income is ordinary income for the purposes of subsection 6-5(3) of the ITAA 1997.
In your case, based on the information provided the converted funds deposited into your Australian bank were not sourced within Australia; therefore, the converted funds are not included in your assessable income under subsection 6-5(3) of the ITAA 1997 and not subject to Australian income tax.