Recommendation 10 Subject to the Government’s current immigration review, the Board recommends that: temporary resident tax concessions should be amended such that the concessions are not available where an individual has been in Australia for more than 4 years; and should the Government adopt the Board’s modernisation recommendations, temporary residents should be subject to nonresident income tax rates. Recommendation 11 The Board recommends that the Government consider a review in relation to the interaction and possible alignment of the individual tax residency rules and Australia’s immigration visa regime. The Board considers that this may benefit from the work undertaken during the Government’s current immigration review. Annexure B Observation 4 The Board observes that payment and reporting systems for many visa holders remain substandard. This issue has been raised with the Black Economy Taskforce. Observation 5 Consistent with the Government’s regulatory reform agenda, the Board considers that the information supplied to the Department of Immigration and Border Protection to obtain a visa, where the person has the right to work in Australia, should be available to the ATO to facilitate the automatic generation of an application for a tax file number. Observation 6 The Board notes that consultees raised concerns regarding the lack of harmonisation and potential for manipulation of the tax residency rules and access to other Government services. The Board observes that the Government should commission a review of how individuals that reside overseas continue to access Government services but are not subject to tax as Australian residents. Observation 7 The Board observes that while some individuals may seek to manipulate CGT event I1, the Board considers that the ATO should increase its compliance efforts to identify ‘deemedTAP’ assets that should be taxable in Australia. The Board suggests any assets which taxpayers have elected to be deferred as a ‘deemed disposal’ upon ceasing residency should be catalogued and reported to the ATO to use as a reference point for the tracking of any future disposal of such assets. This could be incorporated as part of the annual tax return process.
Recommendation 10 Subject to the Government’s current immigration review, the Board recommends that: temporary resident tax concessions should be amended such that the concessions are not available where an individual has been in Australia for more than 4 years; and should the Government adopt the Board’s modernisation recommendations, temporary residents should be subject to nonresident income tax rates. Recommendation 11 The Board recommends that the Government consider a review in relation to the interaction and possible alignment of the individual tax residency rules and Australia’s immigration visa regime. The Board considers that this may benefit from the work undertaken during the Government’s current immigration review. Annexure B Observation 4 The Board observes that payment and reporting systems for many visa holders remain substandard. This issue has been raised with the Black Economy Taskforce. Observation 5 Consistent with the Government’s regulatory reform agenda, the Board considers that the information supplied to the Department of Immigration and Border Protection to obtain a visa, where the person has the right to work in Australia, should be available to the ATO to facilitate the automatic generation of an application for a tax file number. Observation 6 The Board notes that consultees raised concerns regarding the lack of harmonisation and potential for manipulation of the tax residency rules and access to other Government services. The Board observes that the Government should commission a review of how individuals that reside overseas continue to access Government services but are not subject to tax as Australian residents. Observation 7 The Board observes that while some individuals may seek to manipulate CGT event I1, the Board considers that the ATO should increase its compliance efforts to identify ‘deemedTAP’ assets that should be taxable in Australia. The Board suggests any assets which taxpayers have elected to be deferred as a ‘deemed disposal’ upon ceasing residency should be catalogued and reported to the ATO to use as a reference point for the tracking of any future disposal of such assets. This could be incorporated as part of the annual tax return process.
T307956-income-tax-res-rules.docx