| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051556963086
Date of advice: 30 July 2019
Ruling
Subject: Legal expenses, workers compensation benefits
Question
Are you entitled to a deduction for expenses you incurred in a claim against a Relevant Workers Compensation Authority?
Answer
Yes. The legal expenses incurred by you were to receive weekly payments worked out under a formula that indirectly relied on amounts you previously earned in your former employment. There is a clear connection between your assessable income and the expense.
Accordingly, the legal expenses were incurred in gaining your assessable income and are deductible under Income Tax Assessment Act 1997 (ITAA 1997).
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
In 20XX you were diagnosed with a cancer related to relevant exposure.
Your oncologist advised you to seek legal advice in order to pursue a claim with the Relevant Authority (X), since the exposure was likely related to your work.
You engaged the services of a solicitor who confirmed that you were exposed during your time working on a building demolition.
The same year, your solicitor lodged a workers compensation claim on your behalf.
The following year, the Relevant Authority accepted your claim and fortnightly benefits commenced from your date of diagnosis. The benefits are deemed to be income and tax is deducted from your payments. The benefits include an allowance for your dependant spouse.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
