Private ruling: The deductibility of the costs associated with your visa application
Date of advice: 9 November 2015
Published: November 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction for the costs associated with your application for an employer sponsored subclass 186 permanent resident visa? | A1: No.

Relevant facts and circumstances: You have applied for a new work visa to allow you to continue working with your employer. You worked for this employer before the application was granted. You incurred costs in obtaining the visa.

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 cost of applying for a visa is considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose of applying for the visa was to allow you to remain legally in Australia. Whilst the visa allows you to remain and work in Australia, the cost was not incurred in the performance of your employment duties. Accordingly, as the expense you incurred in applying for a work visa was not incurred in gaining your assessable income, you are not entitled to a deduction for this cost.