Australia - Tax Office updates for New Zealanders who can be temporary residents of Australia

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The Commissioner of Taxation has issued a Draft Taxation Determination TD 2012/D3 on March 28, 2012 in which he agrees that a New Zealand citizen who was lawfully in Australia holding a Special Category Visa under the Migration Act and whose spouse is not an Australian citizen or a Permanent Resident does not lose their Temporary Resident status just because they “go home for a weekend” and an anomaly in the Migration Act regulations operates to cancel their visa upon departure from Australia.

The Draft Determination effectively reverses the stance taken by Australian Taxation Office auditors who tentatively held the view that New Zealanders permanently lost their eligibility for Temporary Resident status by virtue of falling foul of the disqualification rule in subsection 995-1 of the 1997 Act where an individual “has been an Australian (tax) resident and no longer holds a temporary visa granted under the Migration Act 1958”.

The proper interpretation of this rule has been litigated by the Professional Associations (and one particular Accounting Firm) through the National Tax Liaison Group comprising the professional bodies and the Tax Office Senior Executive including the Chief Tax Counsel. Taking into account the purpose, scope and intention of the legislation it was argued the mere fact a New Zealander left Australia for a brief period and upon re-entry was granted a new Temporary Visa would not result in the loss of the Temporary Resident status of the individual. A literal interpretation to the contrary would be absurd and irrational.