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Edited version of private advice
Authorisation Number: 1013002496816
Date of advice: 29 April 2016
Ruling
Subject: Deductions
Questions and answers
- Are you entitled to a deduction for the costs associated with the facilitation of your determination of educational equivalency?
No.
- Are you entitled to a deduction for the costs associated with the certification of documents and postage of documents?
No.
- Are you entitled to a deduction for the costs associated with your visa?
No.
- Are you entitled to a deduction for the costs associated with relocating to Australia for work purposes?
No.
This ruling applies for the following period:
Year ending 30 June 2015
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
You were a professional in Country Y.
You were offered a job in Australia as a professional.
You relocated to Australia for work.
Prior to accepting the position you were required to obtain recognition of your qualifications with the relevant authorities in Australia.
You incurred the following expenses:
- $XX for facilitation of determination educational equivalency
- $XX for certification of documents and postage of documents
- $XX for visa
- $XX flight from Country Y
- $XX overnight stay to provide proof of identity to relevant authority
- $XX ticket to destination of employment
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) 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.
The expenses associated with the facilitation of educational equivalency were incurred at a point too soon for them to be regarded as being incurred in the course of gaining or producing assessable income.
The expenses to show your educational equivalency in Australia as a professional put you in the position to earn income in Australia.
The costs associated with the certification of documents and postage are related to requirements prior to you commencing your work in Australia and are not allowable.
The expenses associated with acquiring visas relate primarily to the taxpayer's personal right to travel to any overseas destination. They closely parallel the costs associated with obtaining a driver's licence, which were characterised as being of a private nature (Case P55 82 ATC 253; 25 CTBR (NS) 824 Case 117). Thus expenditure in obtaining a passport and visa is generally private in nature. Similarly expenses such as travel insurance policies invariably cover items that are generally private in nature. For example, illness, loss of baggage and theft or damage to belongings.
As the expenses incurred on visas are considered private in nature, they are not allowable deductions.
Travel, relocation and removal expenses of an employee to obtain a new position are generally not allowable deductions under section 8-1 of the ITAA 1997 because the expenses are not incurred in gaining or producing assessable income. In other words, they are not expenses incurred in the course of the earning activity (Amalgamated Zinc (De Bavay's) Ltd v. FC of T(1935) 54 CLR 295; Lunney v. FC of T (1958) 100 CLR 478; 7 AITR 166).
In general, all relocation expenses are a prerequisite to the earning of income in the same manner as are travel expenses to and from work. Such expenses put the taxpayer in a position where they can earn income, but they are at a point too soon to be regarded as being incurred in the course of gaining or producing assessable income (FC of T v. Maddalena 71 ATC 4161). These expenses are not deductible regardless of whether the employee is commencing a new employment or transferring within an existing employment.
The costs associated with relocating to Australia are not an allowable deduction.
You are not entitled to a deduction for the costs associated with the facilitation of your educational equivalency, certification of documents and postage, visa, flights to Australia, overnight stay and other travel under section 8-1 of the ITAA 1997.