Private ruling: Legal expenses
Published: October 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for legal expenses? | A1: Yes.


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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Taxation Ruling TR 2000/5 examines the deductibility of costs incurred in preparing and administering employment agreements. The ruling allows that the costs associated with the settlement of disputes arising from an existing employment agreement, including the cost of representation, are allowable deductions. In your situation, you incurred costs in obtaining legal advice to interpret a condition under dispute in your existing employment contract. Therefore, you are entitled to a deduction for these legal expenses.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You terminated your employment. | At the time, you were instructed that you were obliged under the terms of your employment contract that you could not keep copies of emails and correspondence between yourself and your employer relating to your dissatisfaction. | You sought legal advice regarding the interpretation of the employment contract.