Private ruling: Self-education
Published: November 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for self-education expenses? | A1: No.


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 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 Income tax: deductibility of self-education expenses incurred by an employee or a person in business ; 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 ( Federal Commissioner of Taxation v. Finn (1961) 106 CLR 60, (1961) 12 ATD 348. 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. However, no deduction is allowable for self-education expenses if the study is to enable a taxpayer to get employment, to obtain new employment, or to open up a new income-earning activity (whether in business or in the taxpayer's current employment). This includes studies relating to a particular profession, occupation or field of employment in which the taxpayer is not yet engaged. The expenses are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income. You work on an aircraft. You are not required to have a pilot licence to carry out your current duties. As your current roll does not require you to have a pilot licence or to pilot an aircraft, it is considered that obtaining a pilot licence will open up a new income earning activity. That is, as a pilot of an aircraft. It is considered that there is an insufficient connection between the skills and knowledge required in your current duties and the course that you have undertaken. As there is an insufficient nexus between the course of self-education and your income earning activities, the expenses associated with the course are not incurred in earning your current assessable income. Consequently you are not entitled to a deduction for the expenses.

Your work involves search and rescue. | Your roll dictates that you help the pilot in command at all stages during flight as well as on the ground. | Your duties do not include piloting the aircraft and your job description does not require you to have a pilot licence. | In unforeseen circumstances where the pilot became incapacitated, you may be required to fly the aircraft. This would entail receiving instruction from a qualified person on the ground.