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Edited version of private advice
Authorisation Number: 1051656484457
Date of advice: 17 April 2020
Ruling
Subject: Deduction - legal expenses
Question
Are you entitled to a deduction for the legal expenses you incurred in preparing to defend the manner in which you performed your employment duties?
Answer
Yes. The activities from which you produce your assessable income are what exposed you to the liability against which you were preparing to defend yourself. The expenses are considered incidental and relevant to the gaining of your assessable income. You are entitled to a deduction for the legal expenses you incurred under section 8-1 of the Income Tax Assessment Act 1997.
This ruling applies for the following period
Year ended 30 June 20XX
The scheme commenced on
1 July 20XX
Relevant facts and circumstances
There was a Royal Commission into industries you worked in.
At the time you were a director of a number of companies.
There were numerous complaints by customers against companies that you had worked for.
Due to the likelihood of the Royal Commission examining these complaints you sought independent legal advice as it was possible that you would be called to give evidence or be implicated in evidence given by others.
You wanted to be fully prepared to defend your employment roles in the event that you were called to appear before the Royal Commission.
You incurred expenses for this legal advice.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1