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Edited version of private advice
Authorisation Number: 1051988344719
Date of advice: 2 June 2022
Ruling
Subject: Temporary resident - foreign dividends
Question
Are the dividends you receive from a foreign company while you are a temporary resident included in your assessable income?
Answer
No.
Temporary resident
You are a temporary resident if you:
- hold a temporary visa granted under the Migration Act 1958
- are not an Australian resident within the meaning of the Social Security Act 1991, and
- do not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
The Social Security Act 1991 defines an Australian resident as a person who resides in Australia and is an Australian citizen, the holder of a permanent visa, or a protected special category visa holder.
In your case you are a temporary resident because:
- you hold a temporary visa granted under the Migration Act 1958
- you are not an Australian resident within the meaning of the Social Security Act 1991, and
- you do not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
Foreign source income
Those taxpayers who are temporary residents do not have to pay tax in Australia on most of their foreign income if they:
- are an individual who is an Australian resident for tax purposes, and
- satisfy the requirements of being a temporary resident.
Section 768-910 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income and statutory income derived from a foreign source (excluding employment related income and capital gains on shares and rights acquired under employee share schemes) is not assessable in Australia when derived by a temporary resident.
Therefore, when you become an Australian resident for tax purposes and continue to remain a temporary resident, any foreign source dividend income you derive will not be included in your assessable income.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1July 20XX
Relevant facts and circumstances
You are a citizen of Country X.
You entered Australia on a temporary visa.
You are not a permanent resident of Australia.
You are not a citizen of Australia.
You are not an Australian resident for tax purposes.
You intend to become an Australian resident for tax purposes.
You do not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
You are a director of a foreign company.
You will receive dividends from the company.
You may receive remuneration from the company.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 768-910
Income Tax Assessment Act 1997 Section 768-915
Income Tax Assessment Act 1997 Section 995-1