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Tax Exemptions for Temporary Visaholders
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| Author: |
Alan Collett |
| Date: |
Friday, February 17, 2006 |
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The Australian Federal Treasurer, Peter Costello, has announced proposed changes to taxation that will benefit the holders of temporary Australian visas. The changes are intended to make Australia a more attractive place to work from a tax perspective, to help Australian businesses attract individuals from overseas, and to attract multinational businesses into Australia.
The Taxation Laws Amendment (2006 Measure No. 1) Bill 2006 reintroduces the tax measures that were originally introduced in 2002 but were blocked in the Senate (the Upper House of Parliament) when the Government did not have a majority. Now that the Government has a majority in both Houses it can be expected that this Bill will become law, most probably effective from 1st July, 2006.
The key points are as follows:
- The proposed changes will affect "temporary residents". The Bill defines "temporary residents" as someone who holds a temporary visa granted under the Migration Act 1958, who is not an Australian resident within the meaning of the Social Security Act 1991, and whose spouse is not an Australian resident within the meaning of the Social Security Act 1991.
- A person who is an Australian resident within the meaning of the Social Security Act 1991 is (in essence) someone who is able to access benefits similar to Australian citizens or permanent visa holders).
- Temporary residents will be exempted from tax in Australia in respect of the following:
=> foreign source income (other than employment income)
=> capital gains arising on the disposal of assets that do not have the "necessary connection with Australia"
=> income that would otherwise be attributed to the taxpayer under the Foreign Investment Fund Rules
This means that temporary residents (as defined above) will not be subject to Australian taxation in respect of interest and dividends arising from investments outside Australia, and on capital gains arising on the disposal of investment assets located outside Australia.
This is very significant tax legislation for those who are the holders of temporary visas (or who are considering their visa strategy). It will impact on the holders of employer sponsored temporary visas (subclass number 457), retirement visaholders (subclass number 410), and potentially other visa categories, including Skilled Independent Regional (Provisional) visaholders (subclass number 495).
It is understood that the above exemptions will cease to have effect when a temporary visaholder is granted a permanent Australian visa, not when it is applied for.
It is important to note that the above is a brief summary of recently published proposed legislation. The proposals are not yet law, and may undergo amendments before they become law, and indeed may not become law if they are blocked as the Bill makes its way through Parliament.
More details will be published on Go Matilda News as they become known. If you are concerned about your tax position and would like a review of your tax position please complete the details here.
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| Weblink: |
http://www.treasurer.gov.au/tsr/content/pressreleases/2006/005.asp |
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