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Edited version of your private ruling
Authorisation Number: 1012624412262
Ruling
Subject: Legal expenses
Question
Are you entitled to a deduction for legal expenses you incur?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2011
Relevant facts
You were employed.
In response to an incident in which you perceived there to be a threat of harm to another person or persons, you placed a hand on a person and forcibly pushed them to an area some distance away.
The person had been asked to leave a particular area and had been attempting to re-enter the area.
You incurred legal expenses in relation to the incident. Some of your legal expenses were paid for by the Union.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 provides that a loss or an outgoing is an allowable deduction if it is incurred in producing assessable income or in carrying on a business for the production of assessable income unless that loss or outgoing is capital or of a private or domestic nature.
The courts on a number of occasions have determined legal expenses to be an allowable deduction if the expenses arise out of the day to day activities of the taxpayer's business. The action out of which the legal expense arises has to have more than a peripheral connection to the taxpayer's business and the expense may arise out of litigation concerning the taxpayer's professional conduct.
In FC of T v. Rowe (1995) 31 ATR 392; 95 ATC 4691, an employee incurred legal expenses in defending the manner in which he performed his employment duties. The court accepted that such expenses were allowable and no significance was placed on the taxpayer's status as an employee.
You incurred legal expenses in defending against action that was or was likely to be taken against you resulting from an incident where you pushed a person that you perceived to be a threat to other people. In carrying out the actions that led to the allegations, you were executing your employment duties. Consequently, the legal expenses incurred are an allowable deduction.