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Ruling
Subject: Self education expenses
Question
Are you entitled to claim a deduction for self-education expenses?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You are currently employed as a pilot.
Part of your duties requires you to conduct ferry flights to customers who buy new aircraft from your employer.
Your employer stated you needed an upgraded pilots licence before they could pay you for conducting these flights.
You have now upgraded your licence and you have also completed an instrument ratings course which enables you to fly in poor weather, at night under instrument.
Both of these courses have led to you receiving increased income from your flying activities.
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 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 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.
Similarly, 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 his or her current income earning activities in the future, a deduction is allowable.
In your case, it is accepted that the course will maintain or enhance the skills that are required in the performance of your current role and lead to an increase in your income. Consequently, the self-education expenses incurred have the necessary and relevant connection with the earning of your assessable income. You are therefore entitled to a deduction under section 8-1 of the ITAA 1997 for self education expenses.