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Edited version of your written advice
Authorisation Number: 1051470313166
Date of advice: 23 February 2019
Ruling
Subject: Legal expenses
Are you entitled to a deduction for the portion of your legal expenses that were incurred in relation to your claim for income support payments?
Answer
Yes.
Legal expenses incurred in recovering salary or wages are considered to be of a revenue nature and therefore deductible under section 8-1 of the ITAA 1997.
In Tax Determination TD 93/29 the Commissioner states that legal expenses incurred by an employee in recovering unpaid wages are deductible under section 8-1 of the ITAA 1997, as the expenses are directly incurred in the process of deriving payments of a revenue nature that are assessable.
In your case you incurred legal expenses in relation to receiving income protection insurance payments. As these payments represent a replacement of your salary and wages, they are considered to be revenue in nature and assessable.
This ruling applies for the following period
Year ended 30 June 2017
The scheme commenced on
1 July 2018
Relevant facts
You were diagnosed with a medical condition.
You went on unpaid sick leave and sought legal assistance to receive income continuance payment from your superannuation insurer
You also made a claim for total and permanent disability.
You received monthly income protection payments from which tax was withheld.
You incurred legal expenses in relation to both of the above claims.
Your employment has not been terminated.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.