Private ruling: Assessable income – non-resident interest income
Date of advice: 26 March 2019
Published: May 2019
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you as a non-resident subject to income tax on the deposit transferred from overseas bank accounts into an Australian bank account? | A1: No

Relevant facts and circumstances: You are a non-resident of Australia for tax purposes. You hold funds in bank accounts in countries A and B. You will convert the funds into Australian dollars. You will transfer the funds into an Australian bank account by the 30 June 20XX. You will be a non-resident of Australia at the time of transferring the funds into your Australian bank account.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Subsection 6-5(3)

Reasons for decision: Summary: It is the residency status of a taxpayer (rather than citizenship) that determines if and how much they will be taxed on their income for Australian income tax purposes. Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the 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. However, under subsection 6-5(3) ITAA 1997 its states If you are a foreign resident, your assessable income includes: (a) the * ordinary income you * derived directly or indirectly from all * Australian sources during the income year; and (b) other * ordinary income that a provision includes in your assessable income for the income year on some basis other than having an * Australian source. Interest income is ordina ry income for the purposes of subsection 6-5(3) of the ITAA 1997. In your case, based on the information provided the converted funds deposited into your Australian bank were not sourced within Australia; therefore, the converted funds are not included in your assessable income under subsection 6-5(3) of the ITAA 1997 and not subject to Australian income tax.