Private ruling: Legal expenses
Date of advice: 25 June 2018
Published: September 2018
Ruling period: Income year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to a deduction for legal expenses incurred to obtain, with a Total Permanent Incapacity claim, an Invalid Pension? | A1: Yes, the legal expenses you incurred to obtain an invalidity pension resulted in you gaining assessable income. There is a clear connection between the assessable income and the expense. The expenses were not incurred in respect of income that was capital, private or domestic in nature. As such, the legal expenses were incurred in gaining your assessable income and are deductible under section 8-1 of the ITAA 1997.

Relevant facts and circumstances: You were a member of a government run superannuation system. Shortly after you left your work you started your invalidity claim using a firm of lawyers. Almost two years later you received a letter from your superannuation fund stating that your pension became payable on the day after your invalidity retirement. You have been paid arrears of the pension back to when you left work, and tax was withheld from the payment. You are now receiving a pension from your superannuation fund.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 subsection 15-2(1)