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Edited version of your written advice
Authorisation Number: 1012876035442
Date of advice: 9 September 2015
Ruling
Subject: Relocation expenses
Question
Are you entitled to a deduction for relocation expenses?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You relocated from one Australian state to another.
You incurred expenses in relocating.
You moved to extend your registration with a regulatory body.
Without this registration you are unable to continue your occupation in Australia.
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, or relate to the earning of exempt income.
Taxation Ruling IT 2614 examines the deductibility of relocation expenses. The ruling states that expenses incurred in relocating to take up an appointment with a new or existing employer are not allowable deductions as they are private or domestic in nature. This is so, regardless of whether an allowance has been paid, or if the relocation was involuntary.
Taxation Ruling IT 2481 also discusses this expense. At paragraph 9 the ruling states the expenditure is not incurred in gaining or producing income and is not deductible as the taxpayer is not travelling on work, but to work. This is consistent with the view in the Federal Court case Fullerton v. FC of T 91 ATC 4983; 22 ATR 757 (Fullerton's case).
In Fullerton's case, it was held that the shortfall between the costs of relocation and the employer's partial reimbursement was not a loss or outgoing incurred in the gaining or producing of income, notwithstanding that the relocation was in response to the changing necessities of work.
In your case, you have incurred relocation expenses in order to remain in Australia. The relocation expenses are not incurred in gaining or producing your assessable income instead they came at a point too soon to be properly regarded as incurred in gaining assessable income. In addition, the expenses are of a private or domestic nature.
Therefore, you are not entitled to a deduction for the relocation expenses under Section 8-1.