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Edited version of your written advice
Authorisation Number: 1012880670926
Ruling
Subject: Work- related expenses - visa expenses
Question
Are you entitled to claim a tax deduction for the costs associated with your application for an employer sponsored work visa?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You arrived in Australia on a 574 visa with a working permit.
You commenced working with an employer on a part time basis.
Your 574 visa was due to expire and, after discussing with your employer, you applied for a 187 visa.
You incurred expenses in relation to the visa application.
You commenced full time work with you employer, as a part of the conditions for applying for the 187 visa.
You were granted the 187 visa in 20XX.
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 ATO Interpretive Decision (ATO ID) 2002/208 explains the courts consideration of the meaning '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.
In your case, you applied for the Regional Sponsored Migration Scheme 187 visa on dd/mm/yyyy, the expenses incurred in relation to the visa application is a requirement in order for you to continue earning income in Australia.
Whilst it is acknowledged that without the visa you would not be able to earn assessable income in Australia, the expenses associated with the visa are a prerequisite to earning your income. These expenses are incurred at a point in time too soon and are not incurred in the course of earning income from your.
In addition, the cost of renewing the visa is considered private in nature because the purpose for renewing the visa was to enable you to remain legally in Australia (even if it's on a temporary basis).
The cost was not incurred in the performance of your employment duties. Accordingly, the expenses associated with renewing the visa are not deductible under section 8-1 of the ITAA 1997 because they were not incurred in gaining or producing assessable income and are also private in nature.