Edited version of private advice

Authorisation Number: 1052105438560

Date of advice: 11 April 2023

Ruling

Subject: Business deductions

Question

Are you entitled to claim a deduction for the expenses incurred in learning to fly an airplane under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

A deduction is allowed for the flying lessons that were undertaken before and after your DAME course as they were necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. Similarities were drawn with Case R50 84 ATC 391 and F.C. of T. v. Highfield 82 ATC 4463 where the expenses incurred were relating to deriving their assessable income.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You run a business of a non-fellowed general practitioner which you commenced on a specified date.

In order to examine pilots, you were required to become a Designated Aviation Medical Examiner (DAME), which included a recommendation of taking flying lessons.

You provided us with details on your DAME training including when you commenced, completed the course and when you were formally recognised as a DAME and CASA delegate.

You provided us with details on why it was recommended that you take flying lessons.

CASA will be instituting professional development and currency recommendations in the near future, of which Person A stated that flight hours will be assessable hours for a portion of Continual Professional Development hours for the sake of DAME educational currency.

As a DAME, you assess pilots against the physical and mental requirements of undertaking the role of a pilot for the purpose of maintaining a medical standard for flight suitability, suitability with restrictions or to be grounded.

An understanding of the physical and mental demands of a pilot is pivotal to conduct this work.

During DAME training, some very minor examples of flight experience are offered, jet simulation (Airbus 737) and a very light aircraft 30 minute orientation flight. It was stressed that it was only a small example within funding and time restraints and that further experience would be on students to obtain individually.

Being an aircraft pilot is deceptively physical and incorporate significant mental functioning, something that you could not have appreciated without undertaking lessons to learn to fly.

Currently all sources of pilots will attend at the clinic you contract to for face-to-face services. However, some of the service that you run is by telehealth or electronic health - remote and fully privately funded, specifically from home in case of emergency where you have probably spent half of your time, given the complexity of pilots you have recently had to facilitate since launching your DAME practice.

You occasionally still facilitate very basic general practice services, but you discourage it through your billing methods as you don't wish to continue general practice work.

You provided us with details on what services you advertise on your website. Many of your clients will come through another healthcare provider, but you are also sought after independently.

You began marketing yourself independently as a DAME on specified date (although you already had some medicals lined up for existing clients before you officially launched this part of your practice) after significant set up, asset acquisition and accreditation time, specifically in aerospace medicine.

You provided us with information on how much you have currently spent on flying lessons along with how many lessons you had completed prior to completing your DAME training.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1