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Edited version of private advice
Authorisation Number: 1051579902612
Date of advice: 27 September 2019
Ruling
Subject: Legal expenses
Question
Are the legal expenses an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
The expenses incurred by you to prevent defamatory statements being made are an allowable deduction under section 8-1 of the ITAA 1997.
Consequently you are entitled to a deduction for the legal expenses you incurred in pursuing this matter
This ruling applies for the following period:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You are employed by a business.
During the course of your employment you were subject to ongoing harassment by a colleague. The colleague had taken issue with your employment in the role and undertook a campaign of harassment to both bully you into resigning and convince the board to terminate your employment.
The harassment was conducted through a combination of aggressive face to face meetings and electronic interactions insisting you resign.
The colleague also made aggressive approaches to the board calling for the termination of your employment on the basis that you were unfit for the role. The colleague's campaign was conducted in conjunction with external parties and included the circulation of false and unsupported allegations of corruption, criminal conduct, and unethical behaviour.
The colleague escalated the matter as far as the relevant State Ministers in an attempt to intervene and call for your termination.
These interactions happened numerous times at your office of employment and in public over a sustained period.
Concerned that the sustained harassment undertaken would lead to the termination of your employment, or be forced to resign under duress, you sought legal counsel on the most effective way of having the action cease and desist.
It was the opinion of the legal counsel that the actions were unlawful and placed your livelihood at risk and accordingly counselled you to apply to the court to seek orders.
Whilst the orders were unsuccessful, taking the matter as far as the court led the cessation of the harassment campaign against you.
You incurred legal expenses for being provided with legal counsel and court appearance costs in relation to the matter which you have paid in full as the court did not make orders for costs in respect of either party.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1