Private ruling: Deduction - legal expenses
Date of advice: 14 December 2021
Published: March 2022
Ruling period: Year ending XX June 20XX
Date scheme commenced: XX XX 20XX

Ruling: Q1: Are you entitled to claim a deduction for legal expenses incurred in relation to the Claims under section 8-1 of the Income Tax Assessment Act 1997 ? | A1: Yes. Based on the information provided to the Commissioner your legal expenses are an allowable deduction as they were incidental or relevant to the production of your income. The expenses are an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).

Relevant facts and circumstances: You advised that: You are currently employed with the XXXX XXXX. You were issued with a 'Show Cause Notice' on XX XX 20XX pursuant to the Act . Details of the 'Show Cause Notice', were as follows: Allegation 1 That between XX XX 20XX and XX XX 20XX your conduct was improper in that you: a. failed to effectively manage the operation of the Office through inappropriate handling of property, resulting in the loss, mishandling and erroneous destruction of property; b. failed to appropriately manage your property point resulting in excessive costs being incurred by the XXXX XXXX; and c. failed to keep the Office premises and surrounds in a condition suitable for safe workplace operation. Allegation 2 That between XX XX 20XX and XX XX 20XX at your conduct was inappropriate in that you: d. failed to comply with the Management Action Plan (MAP) dated XX XX 20XX, keeping a spreadsheet to hide tasks from your personal task list and failed to maintain the organisational tasks, as required. The allegations were substantiated by the Office in XX 20XX and the proposed penalties included reprimand, redeployment and reclassification. The reclassification penalty was withdrawn in XX 20XX. Subsequent to this you were given an opportunity to respond to this allegation, which you did so in XX 20XX. In XX 20XX the decision of reprimand and redeployment remained as per the ACT . In XX 20XX, you appealed to the Commission for the discipline findings and the penalty decision to be reviewed. In XX 20XX, the Commission ruled in favour of the XXXX XXXX. You then sought legal advice from an industrial relations lawyer on your appeal. Your dismissal and classification change (demotion) were not progressed and allowed to continue to work for XXXX XXXX, but you were reprimanded and re-deployed away from property operations. There is no further appeal beyond this point.

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