Private ruling: Legal expenses
Date of advice: 4 November 2019
Published: January 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you entitled to a deduction for legal fees in relation to a work cover claim? | A1: Yes. You advised that you incurred legal expenses in relation to securing back payments for loss of income from worker compensation. Your payments were cut off following the two year period following your work place injury. You therefore sought legal advice and assistance, and as a result of the advice and assistance, you were granted a lump sum in the 2018-19 financial years as back pay to June 20XX. The lump sum payment that you received is assessable and included in your taxable income. Therefore the legal expenses you have incurred in pursuit of this income are deductible in the year you incurred them.

Relevant facts and circumstances: You have incurred legal expenses during the 2018-19 financial year. The legal fees were incurred in relation to a workers compensation decision. You appealed a decision to cut your payments. You were successful in your appeal, and you received a back payment which had tax withheld from it during the 2018-19 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1