Private ruling: Work related deductions – pilot course for an employee diver
Date of advice: 10 May 2019
Published: June 2019
Ruling period: 01 July 2018 to 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you entitled to a deduction for expenses incurred in undertaking a pilot course? | A1: No

Relevant facts and circumstances: ● You are employed as a maintenance diver. ● You service remote moorings. ● You were transported to the moorings by air, piloted by another person. ● You undertook a pilot course. ● You now fly yourself to the moorings. ● You received a pay rise once the license was granted.

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 your 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. Paragraphs 13 and 14 of TR 98/9 provide that self-education expenses will satisfy the requirements of section 8-1 of the ITAA 1997 if: ● a taxpayers 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; or ● 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. Therefore, provided there is sufficient connection between your course of self-education and your current income earning activities, you are entitled to claim a deduction for your self-education expenses. However, paragraph 15 of TR 98/9, provides that self-education expenses will not be deductible if the study is intended to: ● enable you to get employment; ● enable you 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 a taxpayer is not yet engaged. The expense is considered to be incurred at a point too soon to be regarded as incurred in gaining or producing assessable income ( FC of T v. Maddalena 71 ATC 4161; 2 ATR 541). In your case you have completed a pilot course whilst employed as a maintenance diver. On successful completion of the course you have a qualification to fly and your employment position is still as a maintenance diver. As a result of the acquisition of the commercial pilot’s license, you have stated that you received a pay rise. The pilot course does not increase your skills or specific knowledge to carry out your role as a diver. The cost of the course is not allowed as a deduction as it is not incurred in earning your assessable income as a diver.