well here's where my 'current' career comes into play (qualified chartered accountant and all) - the tax legislation refers to a 'nexus' ie. a connection with your employment. As long as you're currently earning a living from what you do ie. as long as you're EMPLOYED as a flight instructor at the time (and therefore getting paid for it as your main source of income), and doing your ME/CIR as well, in my view this establishes the required 'nexus'.
Take for example me as a CA - when I was a grad (ie. you as a CPL only), I started work at a Big 4 CA firm (you joining your flying school). I then proceeded to study for my Chartered Accountants qualification (which is a grad dip) which was tax deductible as it was incurred in relation to my employment - similarly for you, you're the instructor doing your ME/CIR which is in direct relation to your employment, therefore the connection is there. Mind you, my CA cost about $6k which is probably less than your ME/CIR.
If you have any issues, give the ATO a call - best to get it 'from the horses mouth'. Otherwise, pay $75 and get a proper tax accountant to do it for you - could save you thousands (in a refund or in avoiding a tax penalty for a false claim).
hope that helps. Now you see why I want to leave accounting and fly???
