Private ruling: Deduction - legal expenses
Date of advice: 29 November 2021
Published: February 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim a deduction for legal fees incurred for pursuing an assessable workers compensation claim? | A1: Yes . It is accepted that the legal fees you incurred for pursuing an assessable workers compensation claim, have a direct nexus to the earing of your assessable income. The legal expenses are therefore deductible under section 8-1 of the Income Tax Assessment Act 1997 . (ATO ID 2010/209 Income Tax - Legal expenses incurred in pursuit if an assessable workers compensation payment for lost earnings).

Relevant facts and circumstances: You sustained a workplace injury and submitted a claim for workers compensation. You received interim weekly payments whilst your matter was being assessed. Your claim was rejected, and you sought legal assistance with legal expenses incurred. Your matter was conciliated, and the claim has been accepted in full. You have received a back payment of your entitlement to ongoing weekly payments and the amounts received will be included in your income tax return as assessable income.

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