Private ruling: Self-education expenses
Date of advice: 18 August 2017
Published: December 2017
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will your self-education expenses undertaking private flying hours be deductible? | A1: Yes.

Relevant facts and circumstances: You are employed as a co-pilot. You currently fly smaller propeller aircraft. You want to progress to flying larger aircraft and increase your income earning capacity. To do so you require 500 hours minimum flight time as Pilot In Command (PIC) and increased Multi Command hours. To apply for more advanced and higher paying airline jobs you also require multi Command experience (there are two sets of command hours; single engine and multiple (multi) engine) to be competitive with other applicants. You currently have less than XX hours Multi Command. You currently hold approximately # hours of PIC. To log hours as PIC a pilot must be the captain/in charge of the aircraft. Your current role does not allow you to log PIC hours, to do so you need to fly privately. Your employer currently allows you to fly privately up to # hours per year. Your duties are as follows: ● Flight plan. ● Pre-flight aircraft. ● Take-off and land aircraft. ● Manage unexpected and emergency situations. ● Study and train both at home and in the companies simulators on an ongoing basis. ● Complete annual courses in a range of safety and emergency programs. You do not receive any allowances. You may commence the course in the near future. You will incur the cost of the hire of aircraft. No course fees are applicable as you already hold all relevant endorsements and qualifications to operate this type of aircraft. Your employer encourages and specifically allows you to undertake additional flying by providing up to # hours a year in which you can fly without requiring any additional approvals.

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

Reasons for decision: Summary: 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, or relate to the earning of exempt income. Taxation Ruling TR 98/9 discusses the circumstances under which self-education expenses are allowable as a deduction. A deduction is allowable for self-education expenses if a taxpayer's current income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of the self-education enables the taxpayer to maintain or improve that skill or knowledge. Similarly if the study of a subject of self-education objectively leads to, or is likely to lead to an increase in a taxpayer's income from his or her current income earning activities in the future, a deduction is allowable. However, no deduction is allowable for self-education expenses if the study is designed to enable a taxpayer to open up a new income-earning activity, whether in business or in the taxpayer's current employment. Such expenses of self-education are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. The private flying hours will enable you to improve and supplement your existing flying skills. They will improve your ability to perform your work and may improve your chances of advancement in your field of employment. The expenses incurred in undertaking private flying hours have the necessary connection with your assessable income and are deductible under section 8-1 of the ITAA 1997.