Private ruling: Legal expenses
Date of advice: 6 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 expenses associated with seeking legal advice regarding your response to allegations of misconduct? | A1: It is accepted that the legal expenses you have incurred directly relate to your income earning activities. They are not private or domestic in nature and are also not capital in nature. Therefore, the legal expenses will be an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).

Relevant facts and circumstances: In XXXX your employer reviewed allegations made against you of misconduct in the course of your work. You obtained legal representation to assist with defending your conduct. You responded to the allegations of misconduct with the assistance of your legal representation via written correspondence. Your superior advised that you would retain your position and you received a warning for your actions. You incurred legal fees.

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