Private ruling: Legal expenses
Date of advice: 23 February 2019
Published: May 2019
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2018

Ruling: A1: Yes. Legal expenses incurred in recovering salary or wages are considered to be of a revenue nature and therefore deductible under section 8-1 of the ITAA 1997. In Tax Determination TD 93/29 the Commissioner states that legal expenses incurred by an employee in recovering unpaid wages are deductible under section 8-1 of the ITAA 1997, as the expenses are directly incurred in the process of deriving payments of a revenue nature that are assessable. In your case you incurred legal expenses in relation to receiving income protection insurance payments. As these payments represent a replacement of your salary and wages, they are considered to be revenue in nature and assessable.


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


Subject: Legal expenses: Are you entitled to a deduction for the portion of your legal expenses that were incurred in relation to your claim for income support payments? | Relevant facts: You were diagnosed with a medical condition. | You went on unpaid sick leave and sought legal assistance to receive income continuance payment from your superannuation insurer | You also made a claim for total and permanent disability. | You received monthly income protection payments from which tax was withheld. | You incurred legal expenses in relation to both of the above claims. | Your employment has not been terminated.