Edited version of private advice

Authorisation Number: 1051630529908

Date of advice: 20 August 2021

Ruling

Subject: Work related legal expenses

Question

Are the legal, court and other costs associated with the settlement of a dispute with your employer arising under the enterprise agreement an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

Taxation Ruling TR 2000/5 sets out the Commissioner's view of the application of section 8-1 of the ITAA 1997 to costs incurred by employees and employers in preparing and administering employment agreements. An employment agreement is a reference to an agreement between an employee and an employer regarding employment.

In your case, the legal expenses are incurred in protecting an existing right under the employment agreement and therefore an allowable deduction. It is not an expense of a private or of a capital nature.

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

You commenced work with an employer.

You are remunerated under the terms set out in an Enterprise Agreement (EA)

The applicable legislation governs the operation of the Scheme, of which you are a member.

You are in dispute with your employer as you allege they have contravened the EA. You claim it has failed to make the correct compulsory employer superannuation contributions as required by the applicable rules and relevant regulations.

You have incurring costs relating to the dispute and you believe further costs will be incurred until settlement of the matter expected in XXXX.

You have subsequently incurred further legal costs in the amount of $xx

You will continue to incur legal expenses until the dispute is finalised.

There will not be any reimbursement to you for the expenses directly or through an allowance.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1