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Edited version of private advice
Authorisation Number: 1051554087321
Date of advice: 23 July 2019
Ruling
Subject: Deductions - Legal fees
Question
Are legal expenses incurred in obtaining a disability settlement for loss of income earned an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. The legal expenses were incurred in obtaining a disability benefit for loss of salary and wage income. Therefore, as these expenses were incurred in gaining or producing assessable income, they are an allowable deduction under section 8-1 of the ITAA 1997.
This ruling applies for the following period
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The taxpayer received a lump sum payment in respect of a disability benefit for loss of salary and wage income.
The benefit was paid as compensation for the loss of salary and wage income (and was therefore revenue in nature).
The benefit formed part of the taxpayer's taxable income in the year in which it was received.
The taxpayer incurred legal expenses in obtaining this payment.
Relevant legislative provisions
Section 8-1 of the Income Tax Assessment Act 1997