Private ruling: Work related self education expenses
Published: December 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for self education expenses relating to obtaining an aircraft licence? | A1: No.

Relevant facts and circumstances: You are currently employed in a position, and as a part of your duties you train staff. For professional development and 'future proofing' your career in your industry, you completed a particular licence course. Since completing your course you have used the licence for private purposes only. You will not be using the licence in your current position. It was not a requirement of your current position that you obtain the licence. However you believe that having the licence will benefit you greatly in your current position. Once you have attained the necessary qualifications and experience levels, you intend on applying for other positions with your current employer.

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 circumstances in which self education expenses are allowable as a deduction under section 8-1 of the ITAA 1997. If a taxpayer's current income earning activities are based on the exercise of a skill or some specific knowledge and the self education enables the taxpayer to maintain or improve that skill or knowledge, the self education expenses are allowable as a deduction. The decision in FC of T v. Maddalena 71 ATC 4161; 2 ATR 541 supports the Commissioner's view that no deduction is allowable 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. This would include studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. From the list of main activities in your current position it is clear that your role focuses on the management of staff and their training, as well as performing your duties associated with your role. While we acknowledge that the knowledge and skills gained from the course could be of some assistance in your current position, the predominant focus of obtaining a particular licence is to enable you to pilot aircraft and to ensure you a career in your industry in the future. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the course you have completed. Furthermore, it is considered that the study is designed to open up a new income earning activity in the future. As there is an insufficient nexus between the course of self education and your current income earning activities, the self education expenses associated with the course are not incurred in earning your assessable income. Consequently you are not entitled to a deduction for the expenses under section 8-1 of the ITAA 1997.

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.