Private ruling: Legal expenses
Date of advice: 1 October 2021
Published: December 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the legal costs you incurred in obtaining an increase in the amount of workers compensation payments you were entitled to? | A1: Yes. Section 8-1 of the Income Tax Assessment Act 1997 provides that you can deduct from your assessable income any loss or outgoing that you incur in gaining or producing your assessable income. There is a relevant connection between the legal costs you incurred and the earning of your assessable income.

Relevant facts and circumstances: You sustained an injury in carrying out your work duties. You received workers compensation payments based on your average weekly wage. The workers compensation payments you received were subsequently reduced. You engaged a legal firm to lodge a claim for loss of income. The claim was heard as the Administrative Appeals Tribunal (AAT) which found in your favour. Your employer paid you an amount representing a back payment of lost income and also paid a proportion of your legal fees.

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


This ruling applies for the following period period :