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Edited version of your private ruling
Authorisation number : 1012540256491
Ruling
Subject: Work related expenses
Question
Are you entitled to claim a tax deduction for the costs associated with your application for a Visa?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2013
The scheme commences on
1 July 2012
Relevant facts and circumstances
You have been working for your employer for several years.
You entered Australia on a Partner (Temporary) visa. Your visa was due to expire.
You engaged the services of an immigration solicitor to apply for a Temporary Business (Long Stay) (subclass 457) visa to allow you to stay in Australia and continue working for your employer.
You have incurred costs in relation to the visa application.
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, or, in other words, the occasion of the loss or outgoing must be found in whatever is productive of assessable income.
The cost of applying for a visa is considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose of applying for the temporary business visa was to allow you to remain legally in Australia. The cost was not incurred in the performance of your employment duties.
Accordingly, you are not entitled to a deduction under section 8-1 of ITAA 1997 for the costs associated with obtaining your visa as they are not incurred in gaining or producing assessable income. The fact that you obtained the visa so that you could remain in Australia legally to work does not alter this position.