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Ruling
Subject: Passport deductibility
Question 1
Are you able to claim a deduction for the expense of obtaining a passport?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commences on
1 July 2011
Relevant facts and circumstances
You are required to work overseas for a period of twelve months.
You need to obtain a passport to travel overseas.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
Work related expenses generally fall for consideration under section 8-1 of Income Tax Assessment Act 1997 (ITAA 1997). This section allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are capital, or are of a capital, private or domestic nature.
The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 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 incidental and relevant to that end. The words "incurred in gaining or producing assessable income" mean in the course of gaining or producing such income.
The expenditure must therefore be related to the production of assessable income, or, in other words, the occasion of the loss or outgoing must be found in whatever is productive of assessable income.
When a taxpayer obtains a passport so that they can visit another country for work related purposes, their passport gives them the personal right to visit that country whether for private or work related purposes. The cost of obtaining your passport is not incurred in gaining or producing assessable income but rather to secure your access to another country.
The fact that you obtained the passport so that you can work overseas does not alter this condition.
You acquiring a passport relates primarily to your personal right to travel to an overseas destination. This closely parallel the costs associated with obtaining a driver's licence, which is characterised as being of a private nature (Case P55 82 ATC 25).
As with the driver's licence, obtaining a passport is private in nature and therefore the cost of obtaining the passport is a private expenditure.
Accordingly, you are not entitled to a deduction under section 8-1 of ITAA 1997 for the cost of obtaining a passport.