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Edited version of private ruling
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Ruling
Subject: Travel expenses
Question
Are you entitled to claim travel and shipping expenses to and from Australia whilst on a 457 work visa?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
The scheme commences on:
1 July 2007
Relevant facts and circumstances
You and your spouse travelled to Australia on a 457 work visa.
You shipped some of your household goods to Australia.
You visited an overseas country.
You have incurred travel and shipping expenses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for any losses or outgoings to the extent to which they are incurred in gaining or producing your assessable income, except where the loss or outgoing is of a capital, private or domestic nature
Taxation Ruling IT 2481 provides the Commissioner's view on the deductibility of relocation expenses. When a taxpayer transfers employment from one locality to another and incurs expenditure in moving from one place of residence to a new place of residence to take up the duties of the new position, that expenditure is not incurred, in the Commissioner's view, in gaining or producing assessable income and is not deductible under section 8-1 of the ITAA 1997. The taxpayer is not travelling on his or her work but is travelling to his or her work. This is consistent with the view in the Federal Court case Fullerton v. FC of T 91 ATC 4983; 22 ATR 757 (Fullerton's case).
In Fullerton's case, it was held that the shortfall between the costs of relocation and the employer's partial reimbursement was not a loss or outgoing incurred in the gaining or producing of income, notwithstanding that the relocation was in response to the changing necessities of work.
The travel and shipping expenses are not incurred in gaining or producing your assessable income but rather as a prerequisite to earning that income and consequently are of a private nature. Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997.