Private ruling: assessability of foreign sourced income whilst a temporary resident of Australia
Published: February 2013
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Questions and answers | 1. Is the income you earned prior to gaining permanent residency in Australia assessable in Australia? | No. | 2. Is any capital gains tax (CGT) payable on becoming an Australian resident? | No. | 3. Will the CGT rules apply to the future disposal of any CGT assets held by you when you became an Australian resident? | Yes.

Relevant facts and circumstances: You entered Australia in early 2008 on a temporary resident visa and departed on several days later, this was the only time you had been to Australia prior to entering in 2009. You entered Australia on a temporary resident visa in mid 2009 and recently obtained a permanent residency class visa in 2012. You accumulated a significant amount of wealth before you received your permanent residency status from asset accumulation and foreign source income.

Relevant legislative provisions: Section 6-15 of the Income Taxation Assessment Act 1997 | Section 768-910(1) of the Income Taxation Assessment Act 1997 | Section 995-1 of the Income Taxation Assessment Act 1997 | Provision 30(2) of the Migration Act 1958 | Provision 7 of the Social Security Act 1991

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. Section 6-15 of the Income Taxation Assessment Act 1997 (ITAA 1997) provides that an amount of non-assessable non-exempt income is not included in your assessable income. Section 768-910(1) of the ITAA 1997 states that ordinary income that you receive after 1 July 2006, from a non-Australian source when you are a temporary resident, is non-assessable non-exempt income. Section 995-1 of the ITAA 1997 defines a temporary resident as: 1) a holder of a temporary visa granted under the Migration Act 1958, and 2) you or your spouse are not Australian residents under the Social Security Act 1991 . Provision 30(2) of the Migration Act 1958 provides that a temporary visa is a visa which allows you to remain in Australia during a specified period. Provision 7 of the Social Security Act 1991 defines an Australian resident as a person who resides in Australia and is either an Australian citizen or holds a permanent visa. | Detailed Reasoning - Becoming an Australian resident: When you become an Australian resident (other than a temporary resident), you are taken to have acquired certain assets at the time you became a resident for their market value at that time. This does not apply to assets you acquired before 20 September 1985 (pre-CGT assets) and assets that were taxable Australian property. When you became a resident, the general cost base rules apply to any CGT assets that are taxable Australian property. | Detailed Reasoning - Application to your circumstances: You entered Australia in 2009 on a temporary resident visa, you satisfied the requirements of being a temporary resident from this time until you became an Australian citizen in 2012. Your foreign sourced income from when you arrived until you received your permanent residency is classed as non- assessable non- exempt income and you are not required to include this income in your income tax return. From the date you were granted a permanent visa, you ceased being a temporary resident and you have to include all income, sourced in and out of Australia, in your income tax returns.