Private ruling: Visa application expenses
Published: August 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for expenses incurred in obtaining a visa? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a XX citizen and have been working in Australia on a Visa. You have been employed by XX for the whole time on a permanent basis. Your employer requested that you apply for a visa in order to be eligible for further employment with them. Your employer requested you utilise the services of a specific legal firm to facilitate the application. You incurred a number of legal and medical expenses 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 which are incurred in gaining or producing assessable income, unless the 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 residence visa was to allow you to live in Australia rather than earn assessable income as an employee. Alternatively, the cost of making application for a permanent residence visa is considered private in nature and not deductible under section 8-1 of the ITAA 1997 because the purpose for applying for a visa was for you to remain legally in Australia. In your case, the expenses were not incurred in gaining your assessable income and are also private or domestic in nature. You are therefore unable to claim the expenses for applying for the visa under section 8-1 of the ITAA 1997.