Private ruling: Legal expenses - employer agreement
Date of advice: 22 August 2024
Published: 30 September 2024
Ruling period: Years ending 30 June 20XX to 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the legal, court and other costs associated with the settlement of a dispute with your employer arising under the enterprise agreement an allowable deduction? | A1: Yes. Taxation Ruling TR 2000/5 Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements sets out the Commissioner's view of the application of section 8-1 of the Income Tax Assessment Act 1997 to costs incurred by employees and employers in preparing and administering employment agreements. An employment agreement is a reference to an agreement between an employee and an employer regarding employment. In your case, the legal expenses are incurred in protecting an existing right under the employment agreement for you as an individual and therefore an allowable deduction. You will need to apportion your share of expenses as stated in Taxation Determination TD 93/29. The expense is not of a private or capital nature.

Relevant facts and circumstances: You are a fulltime employee. You commenced work in 20x when XXXX merged with XXXX. You have worked for the XX government since 20XX. You are remunerated under the terms set out in the XXXX Enterprise Agreement (EA). Relevant Sections of the XXXX EA state: 'The department will make compulsory employer contributions as required by the applicable legislation and fund requirements' . The applicable legislation is the Legislation, which governs the operation of the Superannuation Scheme, of which you are a member. You are in dispute with your employer as they have contravened the EA section XX. You claim that it has failed to make the correct compulsory employer superannuation contributions as required by the Legislation and its regulations. You engaged legal representation to provide advice, representation and if necessary, to commence necessary legal action in the Fair Work Commission or Federal Court under the Fair Work Act 2009. You are one of several respondent that has instigated proceedings with the Federal Court. You have provided a tax invoice from XX Lawyers itemising your individual costs and your shared costs as a respondent. You have incurred costs relating to the dispute and further costs will be incurred until a settlement is agreed upon. You have no entitlement to reimbursement in respect of these costs.

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