Private ruling: Legal expenses deduction related to employment
Date of advice: 5 August 2019
Published: October 2019
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are you entitled to claim a deduction for legal expenses incurred in defending allegations of breach of employment duties? | A1: Yes. It is accept that the legal expenses you incurred were sufficiently connected to your employment duties. Accordingly, the legal expenses were incurred in gaining your assessable income and are deductible under section 8-1 of the Income Tax Assessment Act 1997 .

Relevant facts and circumstances: During the relevant financial year, you were notified by your employer that you have been stood down pending investigation into not complying with employer's guidelines whilst performing your duties. You were off work for several months on paid leave. After one month of investigation the employer said that the allegations were founded and this was likely to lead to termination of your employment. At a result you engaged the services of a solicitor to argue with the allegations and attend hearings. Upon receipt of your solicitor's reply to the allegations and a meeting with your employer you were cleared from any wrong doing and your employment was not terminated. You provided the amount you incurred in legal expenses in this matter.

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