Private ruling: Work related expenses - legal expenses
Date of advice: 16 August 2017
Published: November 2017
Ruling period: Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for your legal expenses? | A1: Yes Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Your legal expenses are not considered to be private in nature as they were related to an issue that arose while carrying out your employment position. Accordingly, the legal expenses you incurred have the requisite connection to your income earning activities and you are entitled to a deduction for these expenses under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You were employed. You were not a director or owner of this company Your employer sold contracts to a third party company. Your duties included providing transition assistance to the third party company who purchased contracts off your employer. You ceased employment with your employer. The company ceased trading years later. The third party company instigated legal proceedings naming you and X other defendants – your’ ex employer’s company and the X directors.

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