Private ruling: Legal expenses
Date of advice: 10 September 2019
Published: November 2019
Ruling period: 1 July 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you entitled to a deduction for your legal expenses? | 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.


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


Relevant facts: You were notified by your employer that your position was being terminated. | You former employer did not provide any reason for the termination. | Your former employer did not provide you with satisfactory financial records in relation to your remuneration and termination. | You obtained legal representation and commenced legal proceedings to recover specifically, under payment of wages, non-payment of wages, unauthorised deductions from wages and non- provision of wages. | You and your former employer agreed to settle the dispute and you received $X gross to be paid in instalments. | You incurred $Y in legal expenses.