Edited version of private advice

Authorisation Number: 1052265911411

Date of advice: 4 July 2024

Ruling

Subject: CGT - temporary residency

Question 1

Are you a Temporary Resident of Australia pursuant to section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Question 2

Will the disposal of digital currency asset, whilst you are a temporary resident bring forth an assessable capital gain or loss?

Answer

No.

This ruling applies for the following periods:

Year ending 30 June 20YY

Year ending 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

You were born in Country A and are a Country A citizen.

You entered Australia on DD MM 20YY on a subclass 4XX visa. This visa expired on DD MM 20YY.

On DD MM 20YY you were granted a subclass 4XX visa. This visa expires on DD MM 20YY.

You intend to return to Country A on or before the expiration of your visa on DD MM 20YY.

You do not have a spouse, nor have you had a spouse in the past.

Since arriving in Australia, you have purchased and disposed of digital currency assets and plan on doing so in the future.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1.

Migration Act 1958 subsection 30(2).

Social Security Act 1991 subsection 7(2).

Income Tax Assessment Act 1997 section 104-10.

Income Tax Assessment Act 1997 section 768-915.

Income Tax Assessment Act 1997 subsection 855-10(1).

Reasons for decision

Question 1

Summary

Under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) you are a temporary resident because you hold a temporary resident visa granted under the Migration Act 1958. You are not an Australian resident within the meaning of the Social Security Act 1991 because you are not an Australian citizen or hold a permanent residency visa, and you do not have a spouse.

Detailed reasoning

Section 995-1(1) of the ITAA 1997 defines temporary resident as:

You are a temporary resident if:

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

(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

However, you are not a temporary resident if you have been an Australian resident (within the meaning of this Act), and any of paragraphs (a), (b), and (c) are not satisfied, at any time after the commencement of this definition.

Note: The tests in paragraphs (b) and (c) are applied to ensure that holders of temporary visas who nonetheless have a significant connection with Australia are not treated as temporary residents for the purposes of this Act.

Subsection 7(2) of the Social Security Act 1991 defines Australian resident to be:

An Australian resident is a person who:

(a)            resides in Australia, and

(b)            is one of the following:

(i)              an Australian citizen;

(ii)              the holder of a permanent visa;

(iii)              a special category visa holder who is a protected SCV holder

Question 2

Summary

You are a temporary resident who will dispose of digital currency that is not 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 digital currency whilst you are a temporary resident for taxation purposes.

Detailed reasoning

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 an item of property that is not 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.