House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 Foreign income exemption for temporary residents

Outline of chapter

1.1 Schedule 1 to this bill details amendments to the ITAA 1936 and the ITAA 1997 that will provide certain exemptions from Australian tax for individuals who are considered to be temporary residents of Australia for tax purposes. The chapter explains who the exemptions will apply to and what income or gains will be exempt.

1.2 In addition, it explains changes to the current exemption for exempt visitors from the FIF rules.

Context of amendments

1.3 A Tax System Redesigned noted that the current taxation treatment of foreign expatriates who become temporarily resident in Australia could discourage some multinational enterprises, particularly skill intensive businesses, from locating in Australia.

1.4 The rules were seen as inhibiting attempts to attract key personnel from offshore, especially where taxation of the income from pre-residence investments at the top marginal tax rate could increase the overall tax burden. This additional tax expense is often borne by the Australian business, thereby increasing the cost of doing business in Australia.

1.5 As part of its Stage 2 response to the New Business Tax System, the Government announced changes designed to reduce the tax burden on temporary residents. These would have the effect of assisting those Australian businesses seeking to attract key personnel to Australia.

1.6 Recommendation 22.18 in A Tax System Redesigned that the exemption applies to the foreign source income derived from pre-residence assets and to the interest withholding tax obligations from associated pre-residence liabilities was extended by the Government. The details of this measure were contained in Treasurer's Press Release No. 82 of 15 October 2001. The measure will now:

•

exempt all foreign source income of temporary residents from assets regardless of when they were acquired;

•

ensure that no capital gain or loss would arise on the disposal by temporary residents of assets not having the necessary connection with Australia, other than portfolio interests in Australian publicly listed companies and resident unit trusts; and

•

remove interest withholding tax obligations in respect of liabilities of temporary residents regardless of when incurred.

The extension to the Ralph recommendations avoids locking temporary residents into pre-residence investments or financial arrangements for the period of the 4 year exemption.

1.7 In addition, the existing exemption from the FIF rules for exempt visitors is no longer to be restricted to 4 years for taxpayers holding temporary entry visas. Rather, the exemption will apply whilst a taxpayer is the holder of a temporary visa.

Summary of new law

1.8 The measure contained in this bill is directed at people who would normally be considered to be resident of Australia for tax purposes, but who qualify under the temporary resident exemption.

1.9 Temporary residents will generally be first-time tax residents of Australia who are in Australia on temporary entry visas. However, also included are people in Australia on temporary entry visas who have not been a tax resident of Australia for at least the previous 10 years.

1.10 Presently, a person who is a resident of Australia is taxable on income and gains from all sources whether they are Australian or not. This measure provides a tax exemption for all ordinary and statutory income from a foreign source, net capital gains generally without the necessary connection to Australia and for interest withholding tax obligations associated with overseas liabilities. The exemption applies to the individuals who are considered to be temporary residents, for a maximum period of 4 years. The exemption will not, however, apply to remuneration received for or associated with employment, or for services performed while a resident of Australia.

1.11 In addition, this bill removes the 4 year limitation on the FIF exemption for all people considered to be exempt visitors for the purposes of the FIF legislation.

Comparison of key features of new law and current law

Detailed explanation of new law

To whom will the 4 year exemption apply?

1.12 The exemption will apply to individuals who are considered temporary residents for the purposes of Australian taxation law.

Who is a temporary resident for the purposes of the 4 year exemption?

1.13 An Australian resident individual is considered to be a temporary resident for taxation purposes if the following conditions are satisfied:

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the person has not been an Australian resident at any time during the 10 years before last becoming an Australian resident;

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the person has not been an Australian resident for more than 4 years since last becoming an Australian resident;

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the person is the holder of a temporary entry visa granted under the Migration Act 1958; and

•

the person has not applied for a permanent visa under the Migration Act 1958 (unless the application, and any review or appeal proceeding in relation to the application, has been finally determined, withdrawn or otherwise disposed of).

[Schedule 1, item 12, definition of 'temporary resident' in subsection 995-1(1)]

The qualification to the application for a permanent visa means that a person may still be considered to be a temporary resident in instances where a permanent visa had been applied for, but subsequently was rejected or withdrawn.

1.14 As New Zealand citizens enter Australia under special visa arrangements, provisions are required to ensure that they have access to the exemption in the appropriate circumstances. An Australian resident who is a New Zealand citizen will be considered to be a temporary resident if, in addition to the timing rules above, the person:

•

would have been required to be the holder of a temporary entry visa if not for the fact that the person is a citizen of New Zealand;

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is not a protected SCV holder (as defined in section 7 of the Social Security Act 1991); and

•

has not come to live in Australia permanently.

[Schedule 1, item 12, definition of 'temporary resident' in subsection 995-1(1)]

New Zealand citizens who are protected SCV holders (generally those people who arrived in Australia on or before 26 February 2001) (see paragraphs 1.37 and 1.38) are excluded from this measure. Protected SCV holders have rights of entry and access to benefits similar to those that are available to Australian citizens and are therefore not considered to be temporary residents for the purposes of this measure.

1.15 In determining whether a taxpayer is a temporary resident, periods of residence that ended more than 10 years before the commencement of the current period of residency are to be ignored.

1.16 Whether a person was previously a tax resident of Australia is based on how that person was assessed during their prior period in Australia. The basis of this determination is the domestic definition of who is a resident of Australia for taxation purposes rather than the tie-breaker tests contained in relevant double taxation treaties.

1.17 This 10 year reset rule will allow individuals who were resident in Australia some time ago, for example, people previously here as students or as children of people who came to work in Australia, to qualify for the temporary resident exemption when they return to Australia at a later date.

1.18 The 4 year limitation means that once the 4 year period has lapsed, the individual as a resident taxpayer will be liable to Australian tax on income from all sources. The rule also means that people who re-apply for an additional temporary entry visa to extend their stay in Australia are unable to gain the benefit of the tax exemption beyond the 4 year period.

1.19 When determining compliance with the 4 year period of the exemption and the 10 year reset rule, all times when the person was an Australian resident are taken into account even if they occurred prior to 1 July 2002. [Schedule 1, item 12, definition of 'temporary resident' in subsection 995-1(1)]

Example 1.1

Peter successfully applied for a temporary entry visa and arrived in Australia on 1 September 2001 from the USA to assist XYZ Co in its IT area. Subject to visa requirements, he intends being in Australia for a maximum period of 5 years and has no intention of taking up permanent Australian residency.

Peter previously lived in Australia for 5 years up until August 1990 before moving permanently to the USA.

In this instance, Peter would qualify as a temporary resident as his previous period of Australian residency for tax purposes occurred more than 10 years ago.

Peter would in this instance have access to the exemption for the period 1 July 2002 (apart from the interest withholding tax exemption) until 31 August 2005. The period 1 September 2005 to 30 August 2006, being the final year of his intended stay in Australia, would not be covered by the exemption.

To what does the 4 year exemption apply?

Income derived by temporary residents from a foreign source

1.20 The exemption will apply to ordinary and statutory income derived from a foreign source during the period that a taxpayer is considered to be a temporary resident [Schedule 1, item 9, subsection 51-52(1)]. The exemption applies to all ordinary or statutory income derived by the taxpayer, either directly or indirectly, from a source other than Australia, including amounts otherwise attributable from a CFC or a FIF. As mentioned in paragraph 1.10, the maximum period for this exemption is 4 years. It follows that expenses incurred in earning this income are not deductible.

1.21 This exemption, however, does not apply to any income or remuneration that in any way relates to employment or to services performed by the taxpayer while the taxpayer is considered to be a temporary resident of Australia. Such income will continue to be liable to tax in Australia. [Schedule 1, item 9, subsection 51-52(2)]

1.22 Given that ordinary and statutory income from a foreign source of an eligible temporary resident is exempt from Australian taxation, it is also necessary to exclude these taxpayers from attribution percentage calculations that may be required under the CFC rules and in determining income from a non-resident trust [Schedule 1, items 1 and 3, subsections 96C(6A) and 361(3)]. The effect of this is to relieve temporary residents of the compliance burden associated with these calculations. This change will not affect the determination as to whether or not a CFC exists for other taxpayers, that is, the temporary resident's interest may still be counted. This is consistent with the treatment already provided for in the FIF rules for exempt visitors, which would include all temporary residents, who are not required to determine any attribution percentage.

1.23 Where a temporary resident would otherwise include in assessable income an amount, being a gain on employee share options, that is a reward relating to both foreign employment performed before becoming an Australian resident and for employment performed whilst an Australian resident, then the amount is to be apportioned between the relevant countries on the basis of the days of employment exercised in each country. Only the amount that is apportioned to the exercise of employment whilst a temporary resident is to be included as part of assessable income. [Schedule 1, item 9, subsections 51-52(3) to (8)]

Example 1.2

The relevant amount of income is $100,000. Kim, now a temporary resident, exercised 100 days of employment before becoming an Australian resident and 400 days of employment as an Australian temporary resident to earn that amount. Kim would include 4/5 ($80,000) of this amount as being income that is assessable in Australia.

1.24 If the reward that relates to both pre-residence employment and to employment while an Australian resident is taxed as a capital gain in Australia, and the asset does not have the necessary connection with Australia, then the normal CGT rules would apply. This would effectively apportion the relevant gain on the asset between the foreign jurisdiction and Australia.

Gains from overseas assets

1.25 Temporary residents will also be exempt from Australian tax for a maximum period of 4 years on any gain that arises from the disposal of overseas assets. Any loss from such a disposal will be ignored. With 2 exceptions, overseas assets for the purposes of this exemption are assets that are not considered to have the necessary connection with Australia [Schedule 1, item 11, subsection 118-575(1)]. Section 136-25 of the ITAA 1997 lists those assets that do have the necessary connection to Australia. The 2 exceptions are portfolio interests (holdings of less than 10%) held in Australian public companies and resident unit trusts as these assets are considered to be Australian assets for the purposes of this measure. [Schedule 1, item 11, subparagraph 118-575(1)(b)(i)]

1.26 The exemption also covers gains/losses that result from creating contractual or other rights under CGT event D1 or from the creation of future property under CGT event E9 where the gain/loss is considered to have been derived from other than an Australian source. [Schedule 1, item 11, subparagraphs 118-575(1)(b)(ii) and (iii)]

1.27 Consistent with the exemption for ordinary and statutory income from a foreign source, the exemption does not apply to any gain/loss that is made which results from employment undertaken, or to services performed, while a temporary resident. [Schedule 1, item 11, subsection 118-575(2)]

1.28 To ensure consistency with the treatment of gains/losses resulting from the actual disposal of assets, temporary residents are also to be excluded from the operation of the deemed disposal rule, being section 104-160 of the ITAA 1997 [Schedule 1, item 10, subsection 104-165(1A)]. That section seeks to determine a notional gain/loss on assets not having the necessary connection with Australia at the time a person ceases to be an Australian resident. This exclusion means that, in general, assets without the necessary connection to Australia acquired by a temporary resident during the 4 year period of their stay will not be subject to tax in Australia when the temporary resident ceases to be an Australian resident at or before the end of 4 years.

1.29 Subsection 104-165(1) already provides an exemption from the deemed disposal rule for short-term residents when they cease to be an Australian resident where they were resident for less than 5 years during the previous 10 years. The exemption applies to relevant assets acquired before last becoming a resident or which were acquired because of someone's death after last becoming a resident.

1.30 Section 104-165 will still be relevant for temporary residents even though the temporary resident exemption removes the restriction on overseas assets acquired after becoming an Australian resident so that those assets are generally no longer subject to tax. For example, a person may remain a resident for longer than 4 years permitted under the temporary resident exemption. Also, the exclusion provided by subsection 104-165(1) applies to all assets not considered to have the necessary connection with Australia that were held prior to last becoming a resident of Australia.

1.31 As with realised gains/losses, this exemption does not cover portfolio interests held in Australian public companies or resident unit trusts [Schedule 1, item 10, subsection 104-165(1B)]. Nor does it apply to unrealised gains/losses that result from employment undertaken or from services performed while a temporary resident. [Schedule 1, item 10, subsection 104-165(1C)]

Interest withholding tax obligations

1.32 For the duration of the 4 year exemption period a temporary resident will be exempt from all interest withholding tax obligations. [Schedule 1, item 2, paragraph 128B(3)(i)]

1.33 While withholding tax would otherwise be a liability of the overseas lender, it is generally the case that such institutional lenders require the Australian resident to compensate them for the additional expense incurred in lending money to an Australian resident. Therefore, this measure not only reduces compliance costs for the temporary resident, it also indirectly reduces their Australian taxation costs.

What are the changes to the exempt visitor exemption in the FIF rules?

1.34 The exemption for certain visitors to Australia from the FIF rules will no longer be limited to 4 years. Rather the exemption will now apply for the period that a taxpayer is the holder of a temporary entry visa granted under the Migration Act 1958, provided the person has not applied for a permanent visa under that Act [Schedule 1, item 4, paragraph 517(2)(b)]. Those who qualify as temporary residents for the above income and gains exemptions will qualify as exempt visitors.

1.35 The removal of the time limit for exempt visitors will eliminate anomalies for people who are not permanent residents of Australia with accruing superannuation benefits, which are often not accessible until retirement age. Presently, where a temporary visa holder's period of residence exceeds 4 years, he or she will be taxable in Australia on a yearly basis on the increase in their accumulated retirement benefits in non-employer sponsored superannuation funds in their home country. This means that they will be taxed in Australia on an increase in benefits that may not be available to them until they reach their eligible retirement age. Also, double taxation may arise because a credit may not be given in the home jurisdiction, when tax is paid on realisation at a later date, for Australian tax paid on the previously accrued increase.

1.36 The FIF exemption will continue to be available to people who are not New Zealand citizens for as long as they are considered to be exempt visitors to Australia for the purposes of the FIF rules. However, the provisions for when a citizen of New Zealand is considered to be an exempt visitor are being amended as a result of the Government's announcement on 26 February 2001 that requirements for New Zealand citizens seeking access to Australia's social security system have changed.

1.37 Resulting from that announcement, people who are not considered to be protected SCV holders, essentially New Zealand citizens that come to Australia after 26 February 2001, are now required to show that they intend to become permanent residents of Australia before they can access the social security system. For protected SCV holders, essentially those New Zealand citizens here prior to 26 February 2001, there is no such requirement.

1.38 Section 7 of the Social Security Act 1991 defines who is considered to be a protected SCV holder, with the 26 February 2001 being the relevant date in that determination. New Zealanders in Australia on the 26 February 2001 as SCV holders are considered to be protected SCV holders. The section also contains other circumstances based on that date when a person will be considered to be a protected SCV holder. For example, a person outside Australia on that date, but who had spent an aggregate of at least 12 months in Australia in the 2 years immediately prior to that date would be a protected SCV holder if the person returned to Australia.

1.39 As mentioned in paragraph 1.14, protected SCV holders will continue to have similar entry rights and access to benefits as would be available to a permanent resident of Australia. Given this, protected SCV holders are not considered to be exempt visitors for the purposes of this measure. However, a transitional rule is provided so that no New Zealand citizen is disadvantaged by the change in eligibility requirements. Therefore, the existing requirements for a citizen of New Zealand to be an exempt visitor for the purposes of the FIF rules, including the 4 year limitation, will apply to those people who are protected SCV holders (i.e. generally those people who arrived in Australia before 26 February 2001) [Schedule 1, item 5, subparagraphs 517(4)(a)(iii) and (iv)]. In effect, protected SCV holders who were eligible for the FIF exemption as at 30 June 2002 can continue to access the remaining period of their current 4 year exemption. Once that period has lapsed, or the person ceases to be a resident, a protected SCV holder will no longer be considered to be an exempt visitor. [Schedule 1, item 6, subsection 517(5)]

Example 1.3

Sue, a New Zealand citizen, arrived in Australia on 1 July 2000. Sue meets all the requirements of subsection 517(4), including being a protected SCV holder. In this instance, providing her circumstances do not change in relation to becoming a permanent resident of Australia, she will be considered to be an exempt visitor until 30 June 2004.

After that date, as a protected SCV holder, Sue will no longer be able to access the temporary visitor exemption from the FIF rules.

1.40 Where a citizen of New Zealand is not a protected SCV holder (i.e. generally a person who arrived here after 26 February 2001), that person will be considered to be an exempt visitor and be able to access the FIF exemption provided that the person has not applied for a permanent visa or has not come to live permanently in Australia [Schedule 1, item 6, subsection 517(6)]. Whether a person is considered to have come to live permanently in Australia will depend on the facts and circumstances of each case, in a similar manner to that which applied when the exempt visitor exemption was limited to 4 years.

1.41 Like citizens of other countries, these New Zealanders will be exempt from the FIF rules for as long as they qualify as exempt visitors, without any 4 year limitation.

Application and transitional provisions

1.42 Subject to the following 2 paragraphs, the measure dealing with the taxation of temporary residents applies for the 2002-2003 income year and all later income years. [Schedule 1, subitem 13(1)]

1.43 The amendment to exclude temporary residents from withholding tax obligations applies to payments of interest made on or after the date of Royal Assent. [Schedule 1, subitem 13(2)]

1.44 The amendments exempting temporary residents from the operation of the CGT provisions apply if the CGT event happens on or after 1 July 2002. [Schedule 1, subitem 13(3)]

Consequential amendments

1.45 As a result of the introduction of the measure to exempt certain foreign income of taxpayers considered to be either temporary residents or exempt visitors, there will be consequential amendments to the ITAA 1997.

Updating of checklist tables

1.46 Section 11-15 of the ITAA 1997 includes a checklist that refers to provisions covering ordinary or statutory income which is exempt if it is derived by certain entities. This bill necessitates a consequential amendment to include a reference to the exemptions for 'temporary residents' in section 51-52. References are to be included under 2 item headings, these being 'foreign aspects of income taxation' and 'superannuation or related business'. [Schedule 1, items 7 and 8, section 11-15]

REGULATION IMPACT STATEMENT

Policy objective

The objectives of the New Business Tax System

1.47 The New Business Tax System is designed to provide Australia with an internationally competitive business tax system that will create the environment for achieving higher economic growth, more jobs and improved savings, as well as providing a sustainable revenue base so the Government can continue to deliver services to the community.

1.48 The measure dealing with the taxation of temporary residents of Australia contained in this bill is part of the New Business Tax System.

The objectives of the measure in this bill

1.49 The exemption for temporary residents measure is designed to achieve 2 related objectives. The measure seeks to attract internationally skilled mobile labour to Australia. It also seeks to assist in the promotion of Australia as a business location, by reducing the costs to Australian business of bringing skilled expatriates to work in Australia.

1.50 The measure is directed at people who are temporary residents of Australia. While the extension of the exemption from the FIF rules applies to all exempt visitors to Australia, the remaining concessions only apply to those people who are considered to be temporary residents of Australia.

1.51 The temporary resident measure provides a mechanism that reduces the cost of labour for industries and firms that engage people who are considered to be temporary residents. However, the concession is not limited to the actual cost burden imposed on employers of foreign expatriate staff. That is, all people who meet the requirements of being a temporary resident may access the concessions, irrespective of whether or not they are employees.

Implementation options

1.52 The temporary resident measure arises directly from recommendations of the Review of Business Taxation. Those recommendations were the subject of extensive consultation. The implementation options that form the basis of these measures can be found at Recommendation 22.18 of A Tax System Redesigned.

1.53 Subsequent to this, the Government announced that the measure was to be expanded and clarified. As a result, the exemption for temporary residents will now apply to:

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all foreign source income of eligible temporary residents from assets regardless of when they were acquired;

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ensure that no capital gain or loss would arise on the disposal by eligible temporary residents of assets not having the necessary connection with Australia, other than portfolio interests in Australian publicly listed companies. (This bill also treats portfolio interests in resident unit trusts in the same manner as portfolio interests in Australian publicly listed companies.); and

•

interest withholding tax obligations in respect of liabilities regardless of when incurred.

1.54 In addition, the existing exemption for exempt visitors from the FIF rules is no longer to be restricted to 4 years for taxpayers holding temporary entry visas. Rather, the exemption will apply whilst a temporary visa is held.

Assessment of impact

1.55 The potential compliance, administrative and economic impacts of this measure were considered by the Government, the Review of Business Taxation and the business sector. The Review of Business Taxation focused on the economy as a whole in assessing the impacts of its recommendations and concluded that there would be net gains to business, government and the community generally from business tax reform. Submissions received during consultation did not indicate significant concerns about compliance issues.

1.56 Specific compliance issues raised in relation to the taxation of temporary residents subsequent to the release of A Tax System Redesigned have been considered in implementing this measure.

Impact group identification

Temporary residents

1.57 The measure will impact on people holding a temporary visa granted under the Migration Act 1958 who are in receipt of income from foreign sources or who hold foreign assets. It will also affect New Zealand citizens temporarily resident in Australia, who are subject to special visa arrangements.

1.58 A reference to temporary visa holders includes people who enter Australia under the economic, international and social/cultural visa streams. Also included will be people in Australia on student visas as well as New Zealanders who do not intend to stay permanently in Australia. However, many of these temporary visa holders will not be affected by this measure as they are either non-residents for taxation purposes (and so Australia does not tax their foreign income) or because they are not considered to be temporary residents.

1.59 As previously mentioned in paragraph 1.50, the FIF exemption will apply to all holders of a temporary visa, with the remaining concessions only being available to people considered to be temporary residents of Australia.

Business

1.60 Businesses that employ or are run by people who qualify for this exemption may receive an indirect benefit as a result of this measure. This will occur in instances where businesses make normalisation payments to compensate their employees for the potential increase in their overall taxation costs that can occur as a result of their coming to Australia for a short-term period.

1.61 Business will also benefit as key personnel from overseas may now be more willing to come to Australia as a result of the change in their Australian tax obligations.

1.62 The measure will also impact on intermediaries, such as accounting firms, that act on behalf of taxpayers or businesses affected by this measure.

ATO

1.63 The ATO will be required to administer the new arrangements.

Analysis of costs/benefits

Compliance costs

Temporary residents

1.64 Temporary residents affected by this measure will have their compliance costs significantly reduced. Such taxpayers will only be required to declare for Australian tax purposes income derived from Australian sources or gains that result from assets that have a connection with Australia. Information in relation to foreign income and gains would no longer be required for Australian tax purposes, provided that income or gain was not related to Australian employment.

1.65 Similarly, providing an exemption from interest withholding tax obligations will also, where applicable, result in reduced compliance costs for these taxpayers in relation to their Australian tax obligations.

1.66 The removal of the 4 year limit from the FIF exemption for exempt visitors will also reduce compliance costs as affected taxpayers will always be eligible for the exemption irrespective of the length of their temporary stay in Australia.

Business

1.67 For businesses and intermediaries for example tax agents, affected by this measure there may be initially a small cost associated with the training of staff and the modification of internal systems that deal with remuneration. However, given that this is a sought after measure this is not seen as significant. Also, once any necessary training or changes have been implemented this measure will also lead to reduced compliance costs for these businesses and intermediaries.

Administration costs

1.68 There will be administrative impacts on the ATO with the introduction of this measure. These centre on the need to interpret the new law as well as ensuring instructional material and return forms and associated instructions reflect the new law. The ATO will also need to deal with computer system changes and compliance issues to ensure that the measure is working as intended.

1.69 The cost of these administrative changes, however, is not considered to be significant and will be absorbed as part of business as usual.

Government revenue

1.70 The revenue cost of the measures dealing with the taxation of temporary residents is estimated to be between $40 to $50 million per annum.

Economic benefits

1.71 The New Business Tax System is intended to provide Australia with an internationally competitive business tax system that will create the environment for achieving higher economic growth, more jobs and improved savings.

1.72 The measure dealing with the taxation of temporary Australian residents will contribute to these broader economic goals by removing impediments that will assist in attracting internationally mobile labour to Australia. It will also have the effect of reducing business costs where foreigners are employed temporarily in Australia. Australia should then benefit from the dynamic effects of having business located here, as well as from the expenditure, profits and local employment that such businesses may generate. In addition, the bringing to Australia of foreign executives and skilled expatriates will facilitate the transfer of new management techniques and information and skills to the Australian economy.

1.73 While this measure will provide a benefit there is no reliable data available as to the size of that benefit.

Consultation

1.74 The measure dealing with the taxation of temporary residents to Australia was accepted by the Government in their Stage 2 response to the New Business Tax System that was announced on 11 November 1999.

1.75 A consultation workshop was held in May 2000 in relation to the initial announcements made by the Government. In addition, the Department of the Treasury has also received further submissions dealing with the taxation of temporary residents in Australia. As a result of this further consultation process, the Government announced on 15 October 2001 an expansion of the measures beyond what was included in the Stage 2 response. There was also further consultation in April 2002 on the final package of measures.

1.76 Discussions have also taken place with the Department of Immigration and Multicultural and Indigenous Affairs in relation to the visa requirements for people seeking to enter Australia. The Department of Education, Training and Youth Affairs was also consulted in relation to people in Australia on student visas.

Conclusion

1.77 This proposal dealing with the taxation of temporary Australian residents is expected to address some of the issues concerning the employment of skilled temporary residents in Australia. The introduction of this measure will therefore help promote Australia as a business location.