Private ruling: Work related expenses
Published: September 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the expenses incurred to undertake the specialist pathway to receive Australian accreditation for your overseas training? | A1: No.

Relevant facts and circumstances: You were trained overseas. In order to work in Australia you were required to undertake a bridging course. You incurred expenses in order to undertake the course.

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) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or is incurred in earning exempt income. Therefore, in considering whether you are entitled to a deduction for the costs incurred in undertaking the bridging course, it is necessary to consider whether the expenses were incurred in the course of producing your assessable income. Expenses incurred by an employee in obtaining employment are not deductible because the expenses come at a point in time too soon to be regarded as being incurred in gaining assessable income. The expenditure is incurred in getting, not in doing, work as an employee ( Federal Commissioner of Taxation v. Maddalena 71 ATC 4161; (1971) 2 ATR 541 ( Maddalena's case )). Similarly, expenditure that is a prerequisite to obtaining particular employment is not deductible. The expenses you incurred in undertaking the bridging course were incurred in order for you to be able to take up the duties of new employment in Australia. However, these expenses were a prerequisite to you being able to earn assessable income from that employment and they were not actually incurred in the course of carrying out the duties of that employment. Consequently, the expenses that you incurred in relation to the bridging course are not deductible under section 8-1 of the ITAA 1997.