Private ruling: Deductions - visa expenses
Published: July 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can you claim a deduction for the costs of the medical examination and skills assessment incurred in obtaining a permanent Employer Sponsored Visa? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: 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 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 Employer Sponsored visa was to allow you to live in Australia and retain your employment on an indefinite basis rather than earn assessable income as an employee. Alternatively, the costs incurred in respect of making an application for a permanent Employer Sponsored visa are considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose for applying for the visa was for you to remain legally in Australia. Accordingly, the expenses for applying for 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.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You held a temporary work visa to obtain employment in Australia. | In the relevant income year, you were granted a permanent Employer Sponsored Visa. | Your employer funded the application fee to obtain this visa. | You were required to undertake compulsory immigration medical and Skills assessments as part of your application. | You incurred costs to take these assessments.