Private ruling: Legal expenses
Date of advice: 12 November 2018
Published: January 2019
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the legal expenses incurred for advice and advocacy to gain a return to work opportunity from my employer deductible? | A1: Yes. Having considered your circumstances, you are entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). | Q2: Are your out of pocket legal expenses incurred to apply to the Administrative Appeals Tribunal (AAT) to review the agency’s decision deductible? | A2: Yes. Having considered your circumstances, you are entitled to a deduction under section 8-1 of the ITAA 1997 , for a portion of the legal fees you incurred. You cannot claim a deduction for the ‘‘reasonable party/party costs and disbursements’ as referred to in the AAT decision as these are not your out of pocket expenses.

Relevant facts and circumstances: ● You were employed from November 20XX until November 20XX. ● You suffer from a medical condition caused by workplace bullying and harassment that took place in 20XX. ● In November 20XX you applied for worker’s compensation through an agency. ● Your claim was accepted on 12 January 20XX. ● You were paid 75% salary payments. ● You made attempts to re-engage with the employer to return to work, under a different supervisor. ● No offer was received. ● The employer terminated your rehabilitation program in May 20XX. ● You made a submission to the agency to review the decision but this was unsuccessful. ● In May and July 20XX you sought legal advice. ● Your lawyer’s advocacy led to an offer of work trial beginning mid-August 20XX. ● At this time your salary returned to 100%. ● On 3 August 20XX, before you commenced your work trial the agency determined that you no longer suffered from the medical condition. ● The agency revoked your compensation claim payments. ● On 29 August 20XX you made a submission for a review of the agency’s decision, which was unsuccessful. ● Mid-September 20XX you sought legal advice and the lawyers lodged an application with the AAT for a review of the agency’s decision to revoke you compensation payments. ● On 24 November 20XX the employer made you redundant. ● You have been unemployed ever since. ● On 14 August 20XX the AAT made settlement orders that you were entitled to compensation payments and medical expenses with respect of your medical condition until 27 July 20XX. ● In the interim the employer moved to self-insurance, therefore payments will be coming from them and not the agency. ● A portion of your legal fees were paid through the worker’s compensation scheme, however you have incurred legal expense of $XX in October 20XX.

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