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Ruling
Subject: The deductibility of permanent visa expenses
Question
Can you claim a deduction for the expenses incurred while obtaining a permanent resident visa?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2013
The scheme commences on:
1 June 2012
Relevant facts and circumstances
You incurred expenses while applying for and obtaining a permanent resident visa in Australia. This visa will enable you to complete a work contract in Australia.
The expenses you incurred consisted of the visa application fee, photograph costs, medical costs and police checks.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 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 of a capital, private or domestic nature.
The courts have considered the meaning of 'incurred in gaining or producing the assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 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.'
In your case the expenses do not have a necessary connection to the production of your assessable income, as the purpose of obtaining the visa was to allow you to live permanently in Australia. Further, the expenses are also considered private in nature. Therefore the expenses were not incurred in the course of gaining or producing your assessable income and are not deductible.