Private ruling: Legal expenses
Date of advice: 14 April 2020
Published: June 2020
Ruling period: Years ending 30 June 20XX to 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are the legal expenses associated with the settlement of a dispute with your employer arising under the enterprise agreement an allowable deduction? | A1: Yes. Taxation Ruling TR 2000/5 Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements sets out the Commissioner's view of the application of section 8-1 of the Income Tax Assessment Act 1997 to costs incurred by employees and employers in preparing and administering employment agreements. An employment agreement is a reference to an agreement between an employee and an employer regarding employment. In your case, the legal expenses are incurred in protecting an existing right under the employment agreement and therefore an allowable deduction. It is not an expense of a private or of a capital nature.

Relevant facts and circumstances: You work for an employer. You are remunerated under the terms set out in an Enterprise Agreement (EA). The applicable legislation governs the operation of the Scheme, of which you are a member. You are in dispute with your employer as you allege they have contravened the EA. You claim it has failed to make the correct compulsory employer superannuation contributions as required by the Superannuation Act 1990 and its regulations. You engaged legal representation resulting in proceedings lodged to the federal court with the Division of Fair Work. You have no entitlement to reimbursement in respect to costs incurred.

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