| Disclaimer This edited version has been archived due to the length of time since original publication.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 written advice
Authorisation Number: 1012676293622
Ruling
Subject: Visa application expenses
Question
Are you entitled to a deduction for expenses incurred in obtaining a visa?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2014
Year ended 30 June 2015
The scheme commences on:
1 July 2013
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a XX citizen and have been working in Australia on a Visa.
You have been employed by XX for the whole time on a permanent basis.
Your employer requested that you apply for a visa in order to be eligible for further employment with them.
Your employer requested you utilise the services of a specific legal firm to facilitate the application.
You incurred a number of legal and medical expenses in obtaining the visa.
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 which are incurred in gaining or producing assessable income, unless 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.'
The expenditure must therefore be related to the production of assessable income. The purpose of obtaining the permanent residence visa was to allow you to live in Australia rather than earn assessable income as an employee.
Alternatively, the cost of making application for a permanent residence visa is considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose for applying for a visa was for you to remain legally in Australia.
In your case, the expenses were not incurred in gaining your assessable income and are also private or domestic in nature. You are therefore unable to claim the expenses for applying for the visa under section 8-1 of the ITAA 1997.