ATO Interpretative Decision

ATO ID 2002/754 (Withdrawn)

Income Tax

Deduction - Legal Expenses for spousal maintenance
FOI status: may be released

This ATO ID has been withdrawn because it is a straightforward application of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA1997) for legal expenses incurred to defend a claim for spousal maintenance and to vary a property settlement?

Decision

No. The legal expenses are of a private nature and not deductible in accordance with paragraph 8-1(2)(b) of the ITAA 1997.

Facts

The taxpayer's former partner commenced legal proceedings for spousal maintenance and to revise a property settlement made at the time of separation.

The taxpayer incurred legal expenses to defend these claims.

These expenses were paid from the taxpayer's business bank account.

Reasons for Decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or in carrying on a business for that purpose, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

The expenses incurred are not incurred in gaining or producing the taxpayer's assessable income. Furthermore, a taxpayer's marital arrangements are normally regarded as being private in nature. Therefore, any expenditure related to a taxpayer's marital status is regarded as being of a private or domestic nature.

Any legal expenses incurred by the taxpayer to defend a claim for spousal maintenance are regarded as arising directly from the taxpayer's marital status. Therefore, the legal expenses are of a private nature and not deductible in accordance with paragraph 8-1(2)(b) of the ITAA 1997.

Date of decision: 3 May 2002

Year of income: Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
Section 8-1

Keywords
Deductions & expenses
Marriage breakdown
Legal expenses

Business Line: Private Groups and High Wealth Individuals

Date of publication: 31 July 2002

ISSN: 1445-2782

history

	Date:	Version:
	3 May 2002	Original statement
You are here	18 June 2010	Archived

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