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Edited version of your written advice
Authorisation Number: 5010058232041
Date of advice: 10 May 2019
Ruling
Subject: Work related deductions – pilot course for an employee diver
Are you entitled to a deduction for expenses incurred in undertaking a pilot course?
Answer
No
This ruling applies for the following period:
01 July 2018 to 30 June 2019
The scheme commences on:
1 July 2018
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
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.
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