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Edited version of private advice
Authorisation Number: 1051579140727
Date of advice: 10 September 2019
Ruling
Subject: Legal expenses
Question
Are you entitled to a deduction for your legal expenses?
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.
This ruling applies for the following period:
1 July 2019
The scheme commences on:
1 July 2018
Relevant facts
You were notified by your employer that your position was being terminated.
You former employer did not provide any reason for the termination.
Your former employer did not provide you with satisfactory financial records in relation to your remuneration and termination.
You obtained legal representation and commenced legal proceedings to recover specifically, under payment of wages, non-payment of wages, unauthorised deductions from wages and non- provision of wages.
You and your former employer agreed to settle the dispute and you received $X gross to be paid in instalments.
You incurred $Y in legal expenses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8(1)