If you are a New Zealand citizen living in Australia on a Subclass 444 Special Category Visa, you are generally classed as a “temporary resident” for tax purposes — even though you may also be considered an Australian resident for tax purposes.
Under the ATO’s temporary resident rules, you only pay tax in Australia on your Australian-sourced income, such as:
- Salary or wages earned in Australia
- Rental income from Australian property
- Dividends from Australian shares
You do not pay tax on most foreign-sourced income or capital gains (for example, from overseas property or foreign shares), provided you:
- Hold a Subclass 444 visa, and
- Do not have an Australian citizen or permanent resident spouse/de-facto partner.
When could you lose your temporary resident status for tax purposes?
The ATO may revoke your temporary resident classification if you are in a spousal or de-facto relationship with an Australian resident or citizen.
A spouse/de-facto is defined as a person of any gender who:
- Is in a legally recognised marriage, or
- Lives with you on a genuine domestic basis as a couple.
This means if you move in with your partner and they are an Australian resident; you may become liable for tax on worldwide income.
What about overseas investments such as shares or property?
- Personally owned overseas assets: If you own overseas investments — such as foreign shares or overseas investment properties — in your own name and remain a temporary resident (Subclass 444 with no Australian spouse), capital gains from selling these assets are generally not taxable in Australia.
- Assets sold by an Australian resident trust: If an Australian resident trust sells overseas shares or an overseas property and the gain is foreign-sourced, it is generally non-assessable, non-exempt income for a temporary resident beneficiary under s 768-910 ITAA 1997. Certain exceptions may still apply, such as where the gain relates to Australian employment income or where anti-avoidance provisions are triggered.
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