The issue of paying for endorsements

[Zenreverend]

Now without rehashing whether it's 'right or wrong' on principal to pay for endorsements, I have a pretty straightforward point to make and question to ask.

In my professional experience (admittedly not aviation) costs incurred for professional development can be paid by an employer (who wishes to gain good faith and loyalty among its employees) who then might expect a period of bonded employment from the newly trained employee depending on the cost and nature of said training. Companies can write off employee's training costs, so they receive a tax break.

Or the cost can be paid by the employee who is wanting to make a pro-active choice to further his skills and hence career options. This removes any obligation to the employer and of course, he can move on to that new 'better job' straight afterwards. In the case that the employee pays, as long as the costs are for 'furthering a career in which you already derive an income' those costs are tax deductible.

I would imagine the vast majority of those for whom paying for endorsements is an issue, would fit in that category and that this would lessen the blow...?

My question is:
Has anyone actually received recent advice from an accountant about whether this is the case for your situation(s)?
If so, what's the response?

Matt

[training wheels]

In the case that the employee pays, as long as the costs are for 'furthering a career in which you already derive an income' those costs are tax deductible.

I'm not an accountant so don't really know for sure, but at first glance, if it's a work related expense (which it appears to be), then it should be tax deductible. ie, you need the endorsement to do your work, just like a plumber needing his plunger or a grave digger needing his spade to do his job.

[AerocatS2A]

Last time I read the tax rules, you must be undertaking the study to enhance your earning prospects within your current job with your current employer. So, if VB say, "you've got a job mate here's your letter of offer, you start Monday, have fun at the sim training" you'd be good for a deduction. If, on the other hand, they say "We will employ you once you have got an endorsement," then technically it's not tax deductable. That's not to say you can't claim it, but if you get audited you may have trouble substantiating the claim.

Perhaps someone will know if there has already been a test case on this. All I'd say, is be careful making large claims.

training wheels, the tax system isn't that simple unfortunately. You can't even claim the expense of a headset, you have to claim the depreciation in value. You still get the money back, but it happens over the life of the headset rather than straight away.

On the other hand you can claim stationary, luggage, sunglasses and various other things outright.

In case you think I'm mistaken, from the ATO website:

You can only claim self-education expenses that related to your work as an employee at the time you were studying. If your self-education was to help you get a new job or commence a new income-earning activity, you cannot claim your expenses.

So you cannot claim if it is to get you a new job.

[404 Titan]

Zenreverend
In the case that the employee pays, as long as the costs are for 'furthering a career in which you already derive an income' those costs are tax deductible.
Only if such a qualification can be used by your current employer. If you currently fly for a company that say, only operates Dash 8’s for instance and you went and did a B737 or A320 endorsement that you paid for, then it “IS NOT” tax deductible.

FROM THE ATO

WORK-RELATED SELF-EDUCATION EXPENSES

You can only claim self-education expenses that related to your work as an employee at the time you were studying. If your self-education was to help you get a new job or commence a new income-earning activity, you cannot claim your expenses.

Self-education expenses are expenses related to a course of education provided by a school, college, university or other place of education. You must have undertaken the course to gain a formal qualification for use in carrying on a profession, business or trade, or in the course of employment.


OTHER WORK-RELATED EXPENSES

Other expenses include union fees; overtime meals; attending formal education courses provided by
professional associations; seminars, conferences or education workshops; books, journals and trade
magazines; tools and equipment; protective items such as sunscreens and sunglasses; computers and software; telephone and home office expenses.

You cannot claim the cost of entertainment, fines or penalties. You cannot claim private expenses such as child care expenses or fees paid to social clubs.
An endorsement would be classed as a Work-Related Self-Education Expense, not a work-related expense.

[Zenreverend]

So the only situation in which you could claim back training costs, is if you stay with the same employer but upgrade/change type?

Would be worth checking out further for those in that situation, me thinks!

[Icarus53]

Knowing that this is the case (and also that many people have claimed their endo despite that fact that it clearly does not meet these criteria), why then cannot the employers be a bit more flexible about how they offer employment so that the burden transfers to the ATO to some degree?

Example - offer a "training contract" to the prospective new hire with a virtually non-existent pay rate. This means the pilot is technically employed during endorsement training and can claim the expense.

Would that be feasible/legal - any punts?

[linedriva]

I believe the AFAP have some info about this. Some of the guys at VB claimed the endo as a tax deduction, whilst still being employed by the previous company. I was audited by the tax office, and was allowed the claim. It was awhile ago now, the rules may have changed since then.

[404 Titan]

linedriva

You will probably find that the AFAP or DJ have obtained a ruling. This ruling will probably only be for DJ or it may cover J* as well. It certainly won’t cover the whole industry and people in doubt should see their accountant for professional advice.