Private ruling: self-education expenses
Published: February 2012
Ruling period: Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim a deduction for self-education expenses incurred in relation to your employment as a flight instructor? | A1: Yes.

Relevant facts and circumstances: You are employed full time as an instructor at a school. You are paid based on the number of hours worked. You completed your commercial license prior to starting employment as a instructor. Your position involves teaching paying students at all stages of their learning. You also teach the required ground school components. After starting employment you completed various additional study modules related to your work type. Completing these modules enables you to work at night and in bad weather, and you will be able to instruct trainee in these conditions. The modules also allow you to gain the required federal government qualifications necessary to teach advanced students. Your employer has confirmed to you that completion of your additional training will result in you receiving more hours and being able to earn more income. You have incurred costs in relation to your studies, including training, tests, books, simulator time and tuition fees.

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 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. In your case, you are employed as a instructor. It is accepted that the various modules of study you have undertaken will enhance the skills required in the performance of your duties. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self-education expenses. | Detailed Reasoning - Limit to the deductibility of self-education expenses: In certain circumstances you may have to reduce your allowable self-education expenses by $250 in accordance with section 82A of the Income Tax Assessment Act 1936 . However you may have other types of expenses some of which are not allowable as a deduction that can be offset against the $250 before you reduce the amount you can claim for allowable expenses. Further information on how to work out your self-education expenses is provided at pages 38 to 40 of TaxPack 2011 and paragraphs 119 to 155 of TR 98/9. This publication and ruling are available on the Tax Office website: www.ato.gov.au

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.