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Edited version of your written advice
Authorisation Number: 1013004485260
Date of advice: 4 May 2016
Ruling
Subject: Self-education expenses
Question 1
Are you entitled to a deduction for the expenses incurred to renew your airline related qualifications?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2015
The scheme commences on:
1 July 2014
Relevant facts and circumstances
You have previously been employed as an airline employee.
In order to regain employment you are required to undertake training.
You were not employed nor had entered a contract to supply services in that occupation at the time you undertook the training. You could not gain employment until the training was completed.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
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 sets out the circumstances in which self-education expenses are allowable as a deduction. Generally speaking self-education expenses are deductible where they have a relevant connection with the taxpayer's current income earning activities.
If your income-earning activities are based on the exercise of a skill, or some specific knowledge, and the subject of self-education enables you to maintain or improve that skill or knowledge, the self-education expenses are allowable as a deduction.
If the study of a subject of 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, the self-education expenses are allowable as a deduction.
However, a deduction is not allowable for self-education expenses if the study is designed to enable a taxpayer to get employment, to obtain new employment, or to open up a new income-earning activity. The expenses come at a point in time too soon to be regarded as being incurred in gaining or producing assessable income.
Taxation Ruling TR 98/19 states that a deduction is allowable for the cost of renewing licences and for medical examinations for the renewal of relevant licences held by an airline employee.
In your case, you were not employed or contracted to provide services in the airline industry at the time you undertook the training. As such, TR 98/19 does not apply in your circumstances. You were not earning assessable income from airline industry related activities at that time.
It is considered that the expense was to enable you to re-enter your profession. That is, to get employment. Therefore, you are not entitled to a deduction for the training undertaken under section 8-1 of the ITAA 1997.