Private ruling: Temporary residency and assessability of your foreign income
Date of advice: 11 September 2018
Published: October 2018
Ruling period: Financial year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you a temporary Australian resident for taxation purposes? | A1: Yes Subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) defines the term resident of Australia and includes tests to determine if a taxpayer is a resident of Australia for income tax purposes. In addition to this there are temporary resident provisions. The requirements of being considered a temporary resident are that a taxpayer holds a temporary visa granted under the Migration Act 1958, they are not an Australian resident within the meaning of the Social Security Act 1991 , and their spouse is not an Australian resident within the meaning of the Social Security Act 1991. Having considered your circumstances you meet the temporary resident requirements. | Q2: Is your foreign sourced income assessable in Australia? | A2: No Subsection 6-5(2) and subsection 6-10(4) of the Income Tax Assessment Act 1997 (ITAA 1997) provide that the assessable income of a resident taxpayer includes ordinary income and statutory income derived directly or indirectly from all sources during the income year. Section 768-910 of the ITAA 1997 provides that ordinary income derived from a foreign source (excluding employment related income and capital gains on shares and rights acquired under employee share schemes) will be exempt from income tax in Australia when derived by a temporary resident in Australia. You are a temporary resident and your foreign sourced income will be non-assessable non-exempt income and therefore not assessable in Australia.

Relevant facts and circumstances: You and your spouse moved to Australia from another country under a temporary visa. Your visa is valid for four years. This visa is granted under the Migration Act 1958 . There is a work limitation on the visa, though you do not work, and you are required to maintain comprehensive health insurance. You obtained state sponsorship for the visa by investing an amount in a state bond, which must be invested for the duration of the visa. You also had to prove that you have sufficient funds available to support yourself whilst in Australia. The Department of Home Affairs advises that this is a temporary visa for a period of four years and will not lead to permanent residence or citizenship. You intend on applying to renew your visa at the end of this four year period. You have purchased a home in Australia to live in with approval from the foreign investment review board. You derive/receive foreign income from an overseas pension. You also have some investments in the other country which generate income. You earn/receive interest income in Australia from the state bond investment and from the deposit of the funds on which you live.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1997 subsection 6-5(2) | Income Tax Assessment Act 1997 subsection 6-10(4) | Income Tax Assessment Act 1997 section 768-910