Edited version of private advice

Authorisation Number: 1052116396359

Date of advice: 24 May 2023

Ruling

Subject: Income tax: self-education

Question

Are you entitled to a self-education deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of hiring a private aircraft to complete additional Pilot In Command (PIC) flying time?

Answer

Yes. Your self-education expenses are deductible under section 8-1 of the ITAA 1997. The expenses you incur to complete additional PIC flying time will allow you to improve the knowledge and skills required to carry out your current income-earning activities and are likely to lead to an increase in income from your current employment. Further information about self-education expenses can be found in TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or person in business.

This ruling applies for the following periods:

Financial year ending 30 June 20XX

Financial year ending 30 June 20XX

The scheme commenced on:

X February 20XX

Relevant facts and circumstances

You started a pilot cadetship with Company A some years ago.

You obtained your private pilot licence about 9 months later.

You obtained your commercial pilot licence one year later.

You finished your pilot cadetship around the same time you obtained your commercial pilot licence.

You also completed an aviation degree at this time.

Following the completion of your pilot cadetship, you applied for a flying role with Company A. Your application was successful. You were initially due to commence this role immediately, however, the commencement date was delayed due to an employment freeze caused by COVID-19 travel restrictions.

External candidates applying for a flying role with Company A require XX Pilot In Command (PIC) hours. You were exempt from this requirement because you commenced employment under Company A's cadetship program.

As an employee of Company A, you are also considered a 'Group Pilot' which makes you eligible to apply for internal job opportunities with Company B. Some of these roles are exclusively for internal 'Group Pilots'.

You commenced private aircraft hire with an aviation training organisation with the intention of obtaining additional PIC flying time. PIC hours are recorded when a pilot solely commands the aircraft and is solely responsible for its position and safety on both ground and in the air.

You have already completed XX hours of PIC flying time (XX hours completed during your cadetship and XX hours completed via private aircraft hire after the conclusion of your cadetship).

In your current flying role with Company A, you are unable to log PIC hours at work - only a captain can log these.

In your flying role with Company A, you are required to undertake regular simulator assessments. These simulator assessments assess your ability to take-off, land and manoeuvre the aircraft even though you are not afforded the possibility to perform these duties at work.

The completion of PIC flying time by hiring a private aircraft will:

•         enhance your ability to perform take-offs, landings and independently manage complex airspace

•         provide you with the necessary experience to pass your regular simulator assessments

•         enable you to apply for career advancement opportunities within the company group.

Upon completion of the additional hours of PIC flying time you intend to apply for the following positions:

•         Flying role 1 with Company B via the Group Pilot pathway (which result in a higher base salary).

•         Flying role 2 with Company A or Company B (which result in a higher rank and base salary). This position is a more senior role for experienced pilots.

To satisfy the minimum requirements for these roles, you are required to complete XX hours of PIC flying time.

You intend to complete the remaining XX hours of PIC flying time you require by XXXX.

Clause XXX of your Enterprise Agreement (EBA) indicates that seniority will be a major consideration to determine the order of selection/allocation for promotion. There is no way to circumvent the seniority list. You would only be offered a position before someone ahead of you if they were deemed unsuitable for upgrade.

Whilst promotion within the company group from flying role 1 to flying role 2 may be awarded on seniority, it is also subject to your operational performance and training history (regular simulator assessments). These are both enhanced by the experience of privately flying and obtaining PIC hours.

Relevant legislative provisions

Section 8-1 of the Income Tax Assessment Act 1997