Private ruling: Work related deductions
Date of advice: 17 July 2024
Published: 26 August 2024
Ruling period: Year ended 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Are you entitled to a deduction of a fee paid to a service to process your claim? | A1: No.

Relevant facts and circumstances: You were employed by Employer Z until a number of months ago. You were retired from Employer Z due to invalidity. It has been determined that your invalidity is Class A. Later in the same year you were retired, you were awarded a non-taxable pension payment. You paid a service part of the amount awarded to you, to assist with the processing of your claim. You were informed by the service verbally that their belief was that the fee was tax deductable.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or an outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature. A loss or outgoing is not deductible if it is a loss or outgoing of a private or domestic nature (paragraph 8-1(2)(b) of the ITAA 1997); incurred in relation to gaining or producing your exempt income or your non-assessable non-exempt income (paragraph 8-1(2)(c)); or a provision of 'this Act' prevents you from deducting it (paragraph 8-1(2)(d)). Paragraph 8-1(2)(c) of the ITAA 1997 denies a deduction where it is incurred in gaining or producing exempt income. You incurred the fee in relation to a claim made on your behalf which resulted in you being awarded a tax exempt pension payment. The fee is therefore not deductable under Section 8-1 of the ITAA 1997 as the fee relates to a tax exempt payment.