Edited version of private advice

Authorisation Number: 1052362886686

Date of advice: 19 February 2025

Ruling

Subject: Work-related expenses

Question

Are you entitled to a deduction for visa costs under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997')?

Answer

No.

This private ruling applies for the following period:

Year ending XX June 20XX

The scheme commenced on:

XX July 20XX

Relevant facts and circumstances

In 20XX, you were granted a visa from the Australian Government.

You moved to Australia in December 20XX.

In March 20XX you commenced a Master's degree.

You completed the course in 20XX.

On X November 20XX you commenced employment at a company in Australia.

On X January 20XX you submitted an application for visa.

On X January 20XX you were granted the visa to remain in Australia.

To obtain the visa you incurred costs.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Summary

There is no nexus between the visa and the earning of income as the visa was needed prior to employment and to allow you to remain in Australia. Therefore, the costs associated to obtain the visa are considered private in nature and are not deductible under section 8-1 of the ITAA 1997.

Detailed reasoning

Section 8-1 of the 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. It is well established that the words 'in gaining or producing assessable income' are to be understood to mean 'in the course of' gaining or producing assessable income and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income.

The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47, 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."

Application to your circumstances

The cost of applying for a visa to enter a foreign country is considered to be a requirement for most international travel and is private in nature. The expense was not incidental and relevant to your current employment duties and was not incurred in the course of gaining or producing your assessable income as an employee.

The purpose of obtaining the visa was in regard to entering Australia and is considered a pre-requisite to travel and attend the course in Australia, rather than being a cost of the course of study itself.

You are not entitled to a deduction for the costs associated with your foreign visa under section 8-1 of the ITAA 1997.