Private ruling: Work-related expenses
Date of advice: 8 September 2025
Published: 10 November 2025
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are you entitled to a deduction for self-education expenses incurred in association with obtaining your Recreational Pilot Licence under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Once licensed, are you entitled to a deduction for the outgoing costs associated with flying to remote locations during the course of your employment under section 8-1 of the ITAA 1997? | A2: Yes.

Relevant facts and circumstances: You commenced employment with Company A in 20YY. You are employed on a full-time basis for Company A as Chief Executive Officer (CEO). Your most recent employment contract is dated DD MM 20YY. Your employment contract states the following: 4. LOCATION AND TRAVEL 4.2 There may be times when the CEO will be required to undertake reasonable travel in order to perform the Duties. The CEO must not refuse a reasonable request to travel. The CEO will receive allowance as outlined in Schedule B for travel expenses and time. 4.3 The class of travel that the CEO can take will be in accordance with the Company A's policies on work related travel or as determined by MVAC from time to time. 13. EXPENSES Subject to obtaining the appropriate prior authority from Company A and following the production of appropriate receipts, the CEO will be reimbursed for such expenses as are reasonably incurred in the performance of the Duties. SCHEDULE A 3. DUTIES & SPECIFIC RESPONSIBILITIES • Provide leadership, innovation, advocacy to ensure an integrated service is delivered to members of the community. • Responsible for the management of staff and related health professionals in a manner that delivers best outcomes. • Liaise with relevant stakeholders. • Implement the strategic, annual and quality plans approved by the Board. • Ensure the provision of high quality, effective, and efficient publicly funded services. • Ensure performance reporting requirements are met. 4. KEY PERFORMANCE AREAS • Strategic Planning • Board (Support/Papers/Communications) • Financial Management • People & Culture • Relationship Management • Quality & Continuous Improvement • Risk Management & Reporting Your duties require travel to multiple isolated communities and therefore involve travel by car and commercial transport. These trips often involve overnight stays or multi-day absences from your principal place of employment due to the remoteness of the destination. To increase time efficiency, and responsiveness to community needs you commenced a course to obtain your Recreational Pilot Licence (RPL) and pilot an aircraft to these locations. You propose to land at the nearest suitable aerodrome or landing strip to the target community use local ground transport (hire car, community vehicle, or fleet vehicle positioned in advance) to reach the community facility. This would reduce overall travel time compared with driving, enabling same day return trips in many cases. Your employer provided a letter endorsing the use of aircraft travel in the course of your duties dated DD MM YY. The letter states the following: I write in my capacity as the previous Treasurer and current board member of Company A. I confirm that Company A fully sanctions and endorses the use of aircraft by our Chief Executive Officer in the course of their duties. Company A services multiple remote and regional communities... The geographical spread of these communities represents significant travel challenges. Air travel provides a practical and efficient solution, reducing travel time, enabling same day return trips, and ensuring our CEO can deliver timely oversight and support to our staff, programs and stakeholders. Accordingly, Company A regards the use of aircraft by our CEO as a legitimate and effective means of performing their responsibilities. In MM 20YY, you commenced a course to obtain your Recreational Pilot Licence (RPL) with Company B. The expected completion date is early 20YY. An RPL permits to fly as the pilot in command of an aircraft within 25 nautical miles (approximately 50km) of the departure aerodrome, during daylight hours and with the ability to carry passengers. The holder of an RPL is limited to flying aircraft with a single engine, which have a maximum take-off weight less than 1500kg. The course fees are charged on a 'Pay as you fly' basis. You have not been reimbursed for your course fees or any associated expenses.

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, or a provision of the ITAA 1997 prevents it. It is well established that the words 'in gaining or producing assessable income' are to be understood to mean 'in the course of' gaining or producing assessable income and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. This means there must be a relationship, or close connection, between the expenditure and what it is that you do to produce your assessable income. Taxation Ruling TR 2024/3 Income tax: deductibility of self-education expenses incurred by an individual provides the circumstances under which self-education expenses are allowable as a deduction. Paragraph 22 of TR 2024/3 provides that self-education expenses are incurred in gaining or producing your assessable income if either or both of the following apply: • Your income-earning activities are based on the exercise of a skill or some specific knowledge and the self-education enables you to maintain or improve that skill or knowledge. (Principle 1). • The self-education objectively leads to, or is likely to lead to, an increase in your income from your current income-earning activities in the future. (Principle 2). Paragraph 23 of TR 2024/3 provides that self-education expenses are not incurred in gaining or producing your assessable income if either of the following apply: • The self-education will enable you to get employment, to obtain new employment or to open up a new income-earning activity (whether in business or in your current employment). This includes studies relating to a particular profession, occupation or field of employment in which you are not yet engaged. These expenses are incurred at a point too soon to be regarded as incurred in gaining or producing your assessable income. (Exclusion 1) • You are not undertaking income-earning activities to derive assessable income at the time you incurred the expenses. These expenses are not connected to any income-earning activity at the time they are incurred. (Exclusion 2) To determine whether your self-education expenses are deductible, the essential character of the expenditure must be considered. It is necessary to determine whether there is a sufficient nexus between the expenditure and your current income-earning activities. | Detailed Reasoning - Application to your circumstances: The stated purpose of completing the self-education course is to obtain an RPL. Your income-earning activities and the skill and knowledge exercised to complete them do not have a close or relevant connection to acquiring an RPL. Rather, it would provide a personal convenience by reducing travel time when visiting remote locations and communities. The self-education undertaken would not, and is not likely to, result in an increase in income from your current income-earning activities. Further, the RPL privileges you will acquire are limited (for example, it only permits flying 25nm from the point of departure and within your training area) and therefore may not enable you to achieve the objective of travel to remote communities in the course of your employment duties as it is for recreational purposes. While the completion of the course may facilitate further study towards a Private Pilot Licence (PPL), which would provide the broader capabilities needed for such travel, obtaining a PPL would not enhance or maintain the skills and knowledge required for your employment. Although your employer has endorsed air travel as an effective means of reaching these locations, they have not indicated any requirement for you to personally pilot an aircraft as part of your duties. Accordingly, the expenses incurred in undertaking the RPL course are not considered to have the necessary connection with the gaining or producing of your assessable income, and therefore are not deductible. Question 2 Section 8-1 of the ITAA 1997 allows a deduction for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except when the outgoings are of a capital, private or domestic nature. An employee can only deduct a transport expense under section 8-1 of ITAA 1997 if: • They incur the expense in gaining or producing their assessable income. • The expense is not capital, private or domestic in nature. • The expense in not incurred in gaining or producing exempt income or non-assessable non-exempt income. • A provision of the Act does not prevent it from being deducted. Where the occasion of transport expenses can be found in the employee's employment duties, these expenses will be incurred in the gaining or producing of the employee's assessable income. | Detailed Reasoning - Application to your circumstances: Your employment contract stipulates that there may be times when you will be required to undertake reasonable travel in order to perform your duties. It also states that you will receive an allowance for travel expenses. This suggests that your travel expenses will be incurred in the gaining or producing of your assessable income. The travel expenses you incur during the course of your employment will be deductible to the extent that they have not been reimbursed by your employer.