Private ruling: Deductions - legal expenses
Date of advice: 10 September 2020
Published: October 2020
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to claim a deduction for the legal expenses incurred? | A1: Yes. The legal expenses directly relate to the gaining of assessable income and are deductible under section 8-1 of the Income Tax Assessment Act 1997 in the income year they were incurred.

Relevant facts and circumstances: You were employed by Company A who went into liquidation. You lodged a claim against the liquidator for unpaid entitlements. Your claim was rejected and you disputed this by taking legal action. You commenced legal proceedings to appeal against the rejection. A settlement was reached and you were awarded a gross payment.

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