Federal Commissioner of Taxation v. Studdert

Facts of the case

1. The taxpayer was a flight engineer employed by Qantas.
2. The taxpayer took flying lessons for which he claimed a deduction of $7,240 for the 1986/87 income year.

Commissioner argument:
1. The dominant purpose of undertaking the lessons was not related to taxpayer’s duties of current job in its capacity as a flight engineer.
2. The sole basis that the flying lessons improved the taxpayer’s proficiency as a flight engineer was not sufficient to make the cost of those lessons deductible.

Court decision:
Hill J approved the deduction:
1. Taxpayer's purposes or a motive in incurring the outgoing was the improvement of his performance as a flight engineer.
2. Whether the finding that the undertaking flying lessons improved the respondent's proficiency as a flight engineer was sufficient ground to fall within the first limb of sec 51(1) Commonwealth of Australia Income Tax and Social Services Contribution Assessment Act 1936-1956 (equivalent to sDA1 of ITA 2007 )