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Edited version of your written advice
Authorisation Number: 1051453184390
Date of advice: 12 November 2018
Ruling
Subject: Legal expenses
Question 1
Are the legal expenses incurred for advice and advocacy to gain a return to work opportunity from my employer deductible?
Answer 1
Yes. Having considered your circumstances, you are entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Question
Are your out of pocket legal expenses incurred to apply to the Administrative Appeals Tribunal (AAT) to review the agency’s decision deductible?
Answer
Yes. Having considered your circumstances, you are entitled to a deduction under section 8-1 of the ITAA 1997, for a portion of the legal fees you incurred. You cannot claim a deduction for the ‘‘reasonable party/party costs and disbursements’ as referred to in the AAT decision as these are not your out of pocket expenses.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
● You were employed from November 20XX until November 20XX.
● You suffer from a medical condition caused by workplace bullying and harassment that took place in 20XX.
● In November 20XX you applied for worker’s compensation through an agency.
● Your claim was accepted on 12 January 20XX.
● You were paid 75% salary payments.
● You made attempts to re-engage with the employer to return to work, under a different supervisor.
● No offer was received.
● The employer terminated your rehabilitation program in May 20XX.
● You made a submission to the agency to review the decision but this was unsuccessful.
● In May and July 20XX you sought legal advice.
● Your lawyer’s advocacy led to an offer of work trial beginning mid-August 20XX.
● At this time your salary returned to 100%.
● On 3 August 20XX, before you commenced your work trial the agency determined that you no longer suffered from the medical condition.
● The agency revoked your compensation claim payments.
● On 29 August 20XX you made a submission for a review of the agency’s decision, which was unsuccessful.
● Mid-September 20XX you sought legal advice and the lawyers lodged an application with the AAT for a review of the agency’s decision to revoke you compensation payments.
● On 24 November 20XX the employer made you redundant.
● You have been unemployed ever since.
● On 14 August 20XX the AAT made settlement orders that you were entitled to compensation payments and medical expenses with respect of your medical condition until 27 July 20XX.
● In the interim the employer moved to self-insurance, therefore payments will be coming from them and not the agency.
● A portion of your legal fees were paid through the worker’s compensation scheme, however you have incurred legal expense of $XX in October 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
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