Private ruling: Legal expenses
Date of advice: 20 August 2018
Published: October 2018
Ruling period: For the financial year ended 30 June 20xx | For the financial year ended 30 June 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Can you claim a deduction for legal expenses incurred in managing your taxation affairs? | A1: Yes You are entitled to a deduction as subsection 25-5(1) of the Income Tax Assessment Act 1997 allows a deduction for certain tax related expenses, to the extent that it is for managing your tax affairs or complying with an obligation imposed on you by a Commonwealth law, insofar as that obligation relates to the tax affairs of an entity.

Relevant facts and circumstances: You use to be in partnership with xxxxxx. You thought the xxxxxx had been dissolved by your previous accountant. Your contact details for the xxxxxx had not been updated with the Australian Taxation Office (ATO) as you thought it had been dissolved. You were issued you with a summons to appear in court for the non-lodgment of taxation returns for the xxxxxx. You had your current accountant try to resolve the issue prior to the matter proceeding to court. You incurred legal fees to avoid having a record against you, due to your employment. You incurred legal fees of $xx,xxx to $xx,xxx as an individual as the xxxxxx had been dissolved.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 25-5