Edited version of private advice

Authorisation Number: 1052374354304

Date of advice: 20 March 2025

Ruling

Subject: Temporary residency

Question 1

Are you a temporary resident of Australia for tax purposes?

Answer 1

Yes.

Question 2

Are the pension payments you receive from Country A assessable in Australia?

Answer 2

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Person A and Person B were living in the Country A until 20XX, where they both moved to Australia to live permanently.

You both entered Australia on a XXXX visa, which is a temporary visa granted under the Migration Act 1958.

The XXXX visa does not lead to permanent residence in Australia or to Australian citizenship.

This XXXX visa is no longer available to new applicants. However, since 1 July 20XX, existing XXXX visa holders have been able to apply for another XXXX visa which is valid for X years from the date of grant.

In your case, you both last applied for a XXXX Visa in mid-20XX, and your current Retirement visa expires in mid-20XX.

You both applied for a Permanent Resident visa in mid-to-late 20XX.

After this, you were both granted a Bridging visa for up until your XXXX visa expires in mid-20XX.

You are both hoping to be granted a Permanent Resident visa soon.

Your Bridging visa has no effect on your XXXX visa, as your XXXX visa will only end either on its expiry date in mid-20XX or upon you being granted a Permanent Residency visa.

You receive a couple of different Country A pension payments, which are taxed at source in Country A.

Your Country A pensions are deposited to your Country A bank account, where you draw money from for living expenses.

You both do not receive any other income from any other sources, either in Australia or overseas.

Relevant legislative provisions

Income Tax Assessment Act 1997 subsection 6-5(2)

Income Tax Assessment Act 1997 subsection 6-15(3)

Income Tax Assessment Act 1997 section 768-910

Income Tax Assessment Act 1997 section 995-1

Migration Act 1958 section 30

Social Security Act 1991 subsection 7(2)

Reasons for decision

Question 1

Are you a temporary resident of Australia for tax purposes?

Summary

You are a temporary resident of Australia for income tax purposes. Therefore, you are not assessable in Australia on foreign source income and capital gains.

Detailed reasoning

As set out in section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997), an individual is a temporary resident for taxation purposes if:

•                they hold a temporary visa granted under the Migration Act 1958, and

•                they are not an Australian resident within the meaning of the Social Security Act 1991, and

•                they 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 who was in Australia on or before 26 February 2001.

Based on the facts you have provided you are both temporary residents of Australia for taxation purposes because:

•                You both hold a temporary visa issued under the Migration Act 1958, being a XXXX visa, which expires in mid-20XX.

•                You both applied for a Permanent Resident visa in mid-to-late 20XX.

•                After this, you were both granted a Bridging visa for up until your XXXX visa expires in mid-to-late 20XX.

•                Your Bridging visa has no effect on your XXXX visa, as your XXXX visa will only end either on its expiry date in mid-20XX or upon you being granted a Permanent Residency visa.

•                Neither of you have been granted a Permanent Resident visa, however you are both hoping to be granted this Permanent Resident visa soon.

•                neither of you are Australian residents within the meaning of the Social Security Act 1991.

Question 2

Are the pension payments you receive from Country A assessable in Australia?

Summary

As your Country A pension payments have been derived by you whilst you have been a temporary resident of Australia for tax purposes, these pension payments are not assessable income in Australia.

Detailed reasoning

Subsection 6-5(2) of the ITAA 1997 provides that 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.

Your Country A pension payments are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997.

However, section 768-910 of the ITAA 1997 provides that foreign income, other than employment related income and capital gains on shares and rights acquired under employee share schemes, is non-assessable non-exempt income when derived by a person who is a temporary resident of Australia.

Accordingly, your Country A pension payments are non-assessable non-exempt income, as these pension payments have been derived by you whilst you have been a temporary resident of Australia for taxation purposes.

Subsection 6-15(3) of the ITAA 1997 provides that if an amount that is non-assessable non-exempt income, it is not assessable income.

Therefore, your pension payments from Country A are not assessable income.