Edited version of private advice

Authorisation Number: 1052398346115

Date of advice: 12 June 2025

Ruling

Subject: Deductions - legal expenses

Question 1

Are you entitled to a deduction for your legal expenses?

Answer 1

Yes.

Based on the information provided to the commissioner the legal expenses have the relevant connection with your income earning activities and are therefore an allowable deduction.

You are entitled to a deduction under Section 8-1 of the Income Tax Assessment Act 1997 for the legal expenses you incurred.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are employed as a professional.

Your employer has alleged that you acted unprofessionally.

You are being investigated for misconduct.

A risk assessment has been completed and it has been determined that it is not appropriate for you to continue with your usual duties whilst this matter progresses. Pending the outcome of the matter, you will be relocated and placed on alternate duties.

This arrangement is effective from the date of this and will be reviewed both during and after the process has been finalised.

As a result of this decision, your name has been placed on a register.

If you resign from your employment, your record will not be removed unless and until it meets the set criteria for removal.

If you become a preferred candidate in any future recruitment process, your name will be checked against the register. A record does not mean that you cannot be employed or engaged. The employing organisation will assess the relevance of the serious misconduct that led to the creation of the record against the position you are being considered for. If relevant, the organisation will formally assess any risks arising from the serious misconduct for the new position.

You will be given an opportunity to provide any relevant information for consideration before any final decisions about your appointment are made.

You sought legal advice to defend the allegations made by your employer.

Your employer threatened both termination of your employment and cancellation of your professional registration.

Based on legal advice, you initially pursued the matter through the Industrial Relations Commission (IRC). However, your employer indicated they had not yet decided on whether to proceed with dismissal.

The matter was subsequently withdrawn from the IRC. It is currently being addressed through the internal review process.

You have incurred legal costs.

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).