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Edited version of your written advice
Authorisation Number: 1051389226554
Date of advice: 12 July 2018
Ruling
Subject: Legal expenses
Question
Can you claim a deduction for legal expenses incurred to obtain workers compensation payments?
Yes
The legal expenses incurred by you were to recover unpaid weekly compensation payments that are loss of earnings and is therefore revenue in nature and not a capital receipt. 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 section 8-1 of the ITAA 1997.
This ruling applies for the following periods:
Period ending 30 June 20xx
Period ending 30 June 20xx
Period ending 30 June 20xx
Period ending 30 June 20xx
The scheme commences on:
1 July 20xx
Relevant facts and circumstances
You have been employed by xxx since xxxx.
You suffer from a medical condition caused by workplace bullying and harassment.
On xxxx you applied for workers compensation leave as you were no longer able to work due to your medical condition.
On xxxx you sought legal advice from lawyers xxxx.
On xxxx Comcare accepts your claim for compensation payments.
On xxxx your employer xxxx requests Comcare to reconsider their liability.
On xxxx you sought legal advice from lawyers xxxx.
On xxxx Comcare revokes your compensation claim payments.
On xxxx you lodge an application with the AAT to review Comcare’s decision to revoke your claim for workers compensation payments.
On the xxxx the AAT determined that you are entitled to compensation claim payments in respect of your medical condition.
Comcare advised you on xxxx that as a result of the AAT determination to submit your claims for payment to be paid by your employer xxxx.
You received back pay as a lump sum payment from your employer xxxx and continue to receive compensation leave payments from your employer as a result of the AAT determination.
Your employment was never terminated you were always employed by xxxx.
A portion of your legal fees were paid by Comcare.
You have incurred legal expenses of $xxxxx in xxxx financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1