Private ruling: Self-education expenses
Date of advice: 15 February 2018
Published: June 2018
Ruling period: Year ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Question and answer | Are your expenses incurred in connection with a self-education course deductible? | Yes.

Relevant facts and circumstances: You commenced employment as a pilot. For medical reasons you could not continue to hold a particular licence and this resulted in you being unable to fly a particular aircraft and need to retrain on a different aircraft. Your employer has offered you a position at site B base flying subject to the successful completion of the relevant training. The training will be paid for by you. You have been employed full-time by your current employer for some time. The position change from site A to site B would occur on successful completion of the training. A change in position is currently been drafted by your employer, but you have agreed to the proposal. There will be no gap in employment as a pilot with your employer. You paid $X for the training.

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) states that you can deduct from your assessable income any loss or outgoing to the extent to which it is incurred in gaining or producing your assessable income, except where the loss or outgoing is 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 income-earning activities are based on the exercise of a skill or some specific knowledge, and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge (paragraph 13). 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 their current income earning activities in the future, a deduction is allowable (paragraph 14). However, no deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment or to obtain new employment. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income (paragraph 15). In your case, you are employed as a pilot. You can no longer work in your current position flying solo due to health related restrictions which require that you now fly as or with co-pilot. Your current employer offered you a different position as a pilot/co-pilot at a different location subject to the successful completion of the relevant training. You have successfully completed the training and you have paid for it. You accepted the new position prior to paying for and undertaking the training. You will commence your duties after completion of the training. These factors give weight to the conclusion that you were already employed as a pilot at the time you undertook the training. As you have been employed as a pilot at the time you undertook the training the expenditure is not considered to be incurred at a point too soon. The expenditure is regarded as having been incurred in gaining or producing assessable income and as such is an allowable.