Private ruling: Deductions - Legal fees
Date of advice: 23 July 2019
Published: September 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are legal expenses incurred in obtaining a disability settlement for loss of income earned an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The legal expenses were incurred in obtaining a disability benefit for loss of salary and wage income. Therefore, as these expenses were incurred in gaining or producing assessable income, they are an allowable deduction under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: The taxpayer received a lump sum payment in respect of a disability benefit for loss of salary and wage income. The benefit was paid as compensation for the loss of salary and wage income (and was therefore revenue in nature). The benefit formed part of the taxpayer's taxable income in the year in which it was received. The taxpayer incurred legal expenses in obtaining this payment.

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