Private ruling: Legal expenses
Date of advice: 12 May 2021
Published: July 2021
Ruling period: Year ended 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Are legal expenses incurred by you in the course of employment an allowable deduction under section 8 - 1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Having considered your circumstances, it is accepted that you incurred legal expenses in the course of employment. Therefore, the expenses you incurred in relation to this matter are deductible under section 8-1 of the ITAA 1997.


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


Relevant facts and circumstance: Sometime ago you commenced your current period of employment with Company A. | You work under the supervision of your Manager. | During your employment a number of incidents and comments from your Manager led you to feeling bullied and discriminated against. | In addition, you felt that your reputation built up over a number of years in your chosen field would be adversely affected. | You have two children with special needs - Child A and Child B | Child A's mental health condition declined seriously. | Over the course of the next two years at times Child A required 24-hour supervision, hospital admittance and had regular appointments with an adolescent psychiatrist. | During your 1:1 meeting with your Manager you advised your Manager of Child A's condition. | In your next monthly 1:1 meeting with your Manager you updated them on Child A's progress and advised them you may need to take some time off work to care for your child. | Your Manager advised you 'that a day here or there was okay but don't take a chunk of time off until after the audit'. | You were the major contributor to the application for accreditation made to the Regulator by Company A. | After giving your Manager the completed application, they asked you to remove your name from the application and to insert their name as the applicant and supervisor. | Your Manager advised that it was a rule with the Regulator - this was found to be false. | In another monthly 1:1 meeting with your Manager you were reprimanded for not submitting the Regulator material before the due date and for being late to two meetings. | You advised your Manager you had not missed any deadlines or milestones or deliverables and that the timeline was questionable. | Your Manager advised you that you had a development issue which you understood to mean receiving feedback well, which is Company A's value/expectation. | Your Manager also said you had an accountability issue referring to the removal of your name from the application, which is also one of Company A's values/expectation. | There was no acknowledgement from your Manager of your home environment, hours worked, deadlines met and standard of work referring to no technical issues in any work submitted. | You subsequently met with Company A's HR Department to discuss your situation and your leave notification and leave restraint. | Your yearly performance letter was received a short time into the following year. | You asked Company A's HR Department for an independent review of your yearly performance. | You felt vindicated by the outcome of the review as it was basically all positive feedback from colleagues. | There was no follow up meeting with your Manager to discuss the outcome. | You had your mid-year review with your Manager where no issues were raised. | On the same day you received an email from a junior XXXX associate setting out a complaint they had made to your Manager against you. | You were both upset and surprised by the complaint. | None of the issues raised in the complaint about the trial were raised in the regular project meetings which were all minutes. | You asked your Manager how this lengthy complaint got so bottled up for so long without you knowing it and how long your Manager had known about the issues. Your Manager refused to answer the questions. | The next day you went to work but could not stop crying about the complaint and in your lunch break went and saw your doctor. | The doctor advised you to take XX weeks sick leave effective immediately. | On leave you prepared a detailed response to the complaint against you and emailed it to your Manager. Your Manager replied advising you to not worry about the complaint and it would be discussed on your return to work. | You were advised by your doctor to take another XX weeks sick leave. | During your sick leave you had a meeting with your Manager to discuss your leave where you advised them you were suffering from depression and the death of your sibling earlier in the year. | During your XX-week leave you advised your Manager of all the priority work you had on hand. You believed this work would be reallocated. | However, on your return most of the priority work was still to be done and you were given new deadlines for them. | During your monthly 1:1 meeting with your Manager you were handed a Disciplinary Action Letter which scheduled a meeting for two business days away. | The Disciplinary Action Letter refers to work you advised your Manager was a priority while you were away on sick leave that was not completed on time (missing deadlines). | During the year you updated and advised Company A's HR department on your treatment by your Manager. | Later that year you obtained professional legal advice and assistance from a Legal Company to lodge a complaint regarding the bullying and discrimination with your employer. | You do not have professional indemnity insurance, nor will you seek to recover these legal costs from your employer. | You incurred costs of $XX,XXX for the legal services provided by the Legal Company. These services involved consultations about, drafting and reviewing the bullying and harassment complaint letter to your employer.