| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1051596662619
Date of advice: 31 October 2019
Ruling
Subject: Legal expenses
Question
Are your legal expenses deductible?
Answer
Yes.
Your legal expenses are deductible as your legal action was in relation to claims for items of a revenue nature rather than a capital nature as per Taxation Determination TD 93/29 and Romanin v. Commissioner of Taxation [2008] FCA 1532; 2008 ATC 20-055; (2008) 73 ATR 760.
This ruling applies for the following period:
Year ended 30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
After termination of your employment you instructed your solicitors to prepare a claim against your former employer and issue a writ and statement of claim.
In your statement of claim, you contended that no written contract of employment applied to your employment and that your contract of employment was partly oral and partly implied.
In particular, you claimed that to the extent that the employment contract was implied, it included terms requiring the employer to provide you a reasonable period of notice of termination or payment in lieu of such notice.
In your statement of claim, you made claims for a payment in lieu of notice and a performance bonus which you believed that you were owed.
Subsequently you signed a deed of settlement and release in return for the gross amount of $XX,XXX.
Your former employer withheld tax from the settlement payment.
You incurred $XX,XXX in legal fees in relation to the legal action.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1