Private ruling: Legal expenses incurred in defending a business
Date of advice: 25 January 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are the legal expenses incurred in defending the business deductible? | A1: Yes. The legal expenses you incurred arose out of the need to defend your actions whilst carrying out your duties through which you gain or produce assessable income. The legal expenses are therefore deductible under section 8-1 of the Income Tax Assessment Act 1997 .

Relevant facts and circumstances: You are a registered agent The spouse of one of your clients commenced legal action against you and commenced proceedings with the relevant regulatory body to have you de-registered You incurred significant legal expenses in defending the claims made and avoiding deregistration. The costs were paid by you personally and you were not reimbursed by your company or your business insurance. As a result of the defence mounted by your lawyers the legal action was unsuccessful and the deregistration request withdrawn.

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