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Edited version of private advice
Authorisation Number: 1052223970858
Date of advice: 21 February 2024
Ruling
Subject: Temporary residency and disposal of cryptocurrency
Question 1
Are you a temporary resident for taxation purposes?
Answer
Yes.
Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) states you are a temporary resident if you hold a temporary visa within the meaning of the Migration Act 1958, and neither you nor your spouse are an Australian resident within the meaning of the Social Security Act 1991. For the purposes of the Social Security Act 1991 an Australian resident is a person living in Australia who is an Australian citizen, a permanent visa holder or a protected special category visa holder.
In your case you do not have a spouse, you are not an Australian resident within the meaning of the Social Security Act 1991, and you also hold a temporary visa within the meaning of the Migration Act 1958.
As such, you are a temporary resident for taxation purposes.
Question 2
Will the disposal of cryptocurrency whilst you are a temporary resident bring forth an assessable capital gain or loss?
Answer
No.
Section 768-915 of the ITAA 1997 allows a taxpayer to disregard a capital gain or capital loss they make from a capital gains tax (CGT) event if they are a temporary resident when, or immediately before, the CGT event happens provided the capital gain or capital loss would have been disregarded under Division 855 of the ITAA 1997 if the taxpayer were a foreign resident at that time.
A capital gain or capital loss that a taxpayer makes from a CGT event happening in relation to non-taxable Australian property is disregarded under subsection 855-10(1) of the ITAA 1997 if the taxpayer is a foreign resident just before the CGT event happens.
In your case, you are a temporary resident who will dispose of cryptocurrency that is non-taxable Australian property, and any capital gain or loss you will make from the disposal would be disregarded if you were a foreign resident at that time.
Therefore, you can disregard any capital gain or loss you make from the disposal of the cryptocurrency whilst you are a temporary resident for taxation purposes.
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 have been living in Australia for the past few years, and you hold a temporary visa which lets you stay in Australia for a few years.
Since you have been in living in Australia you purchased some cryptocurrency.
You intend on selling the cryptocurrency within the next couple of years whilst you remain in Australia holding the temporary visa.
You do not have a spouse.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 768-915
Income Tax Assessment Act 1997 Section 995-1