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Edited version of private ruling
Authorisation Number: 1011491925257
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Ruling
Subject: Deduction
Are you entitled to a deduction for expenditure incurred when migrating to Australia to take up employment?
No.
Relevant facts and circumstances
You migrated from an overseas country.
The migration to Australia was sponsored by your employer.
You remained with the same employer.
You incurred expenses in relation to your migration.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
Expenditure in voluntarily moving from one location to take up employment in another is not an allowable deduction. The expenditure is considered private in nature.
Detailed reasoning
You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is capital or private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
The courts have considered the meaning of incurred in gaining or producing assessable income. In Ronpibon Tin N.L.Tongkah Compound N.L. v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236 the High Court stated that:
For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing the assessable income it must be relevant and incidental to that end. The words incurred in gaining or producing the assessable income mean in the course of producing such income.
The expenditure must therefore be related to the production of assessable income and not incurred at a point too soon to be deductible (FC of T v. Maddalena 71 ATC 4161; (1971) 2 ATR 541).
Migration expenses
Taxation Ruling IT 2481 provides the Commissioner's view on the on the deductibility of travel expenses incurred by an employee moving to a new locality of employment. When a taxpayer voluntarily transfers employment from one locality to another and incurs expenditure in moving from one place of residence to another the expenditure is not incurred in gaining or producing assessable income and is therefore not deductible under section 8-1 of the ITAA 1997. The expenditure is private in nature as the taxpayer is not travelling on work but is travelling to work.
In your case you migrated to Australia to take up a new position with the same employer. The expenses incurred to migrate to Australia were incurred as a prerequisite to earning income and incurred at a point too soon to be deductible. That is, the expenses were incurred to enable you to earn income rather than incurred in the course of earning income. As such, the expenses are considered to be private in nature and not deductible under section 8-1 of the ITAA 1997.