| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012522851149
Ruling
Subject: Visa expenses
Question
Are you entitled to claim a tax deduction for the costs associated with your application for a permanent residency visa?
Answer
No
This ruling applies for the following period
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
You are working in Australia as a temporary resident.
The opportunity arose for you to undertake training in a certain professional field.
Before applying you were only on a temporary visa.
You incurred expenses on obtaining your permanent residency for the specific purpose of undertaking the training.
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) broadly allows a deduction for any losses or outgoings to the extent to which they are incurred in gaining or producing assessable income except to the extent 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.'
The expenditure must therefore be related to the production of assessable income. The cost of applying for a permanent residency visa is considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose of applying for the visa was to allow you to remain legally in Australia.
The cost was not incurred in the performance of your employment duties. Accordingly, as the expense you incurred in applying for the visa was not incurred in gaining your assessable income, you are not entitled to a deduction for this cost.