Disclaimer This edited version has been archived due to the length of time since original publication.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: 1051686110795
Date of advice: 25 May 2020
Ruling
Subject: Deductibility of legal expenses incurred
Question 1
Are you entitled to claim legal expenses incurred in defending a matter that originated at your former workplace for the financial year ending 20XX?
Answer
Yes, Section 8-1 of the Income Tax Assessment Act 1997 allows for a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing your assessable income.
Based on the facts you have provided, we can conclude that the legal expenses incurred in lodging a Fair Work Commission order to Stop bullying and harassment whilst you were employed and performing your income producing activities were as a result of you seeking advice regarding safe environment to carry out your employment duties.
Accordingly, you are entitled to a deduction under section 8-1 of the ITAA 1997 for legal expenses you incurred to defend your actions in your workplace
Question 2
Are you entitled to claim legal expenses incurred in defending a matter that originated at your former workplace for the financial year ending 20XX?
Answer
Yes, Section 8-1 of the Income Tax Assessment Act 1997 allows for a deduction for a loss or outgoing to the extent that it is incurred in gaining or producing your assessable income.
Based on the facts you have provided, we can conclude that the legal expenses incurred in lodging a Fair Work Commission order to Stop bullying and harassment whilst you were employed and performing your income producing activities were as a result of you seeking advice regarding safe environment to carry out your employment duties.
Accordingly, you are entitled to a deduction under section 8-1 of the ITAA 1997 for legal expenses you incurred to defend your actions in your workplace
Further information regarding "Deductions and Expenses: Legal expenses in course of employment" is addressed in ATO interpretive Decision ATO ID 2001/27.
This ruling applies for the following periods:
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You were employed as a fulltime employee with company X.
Your role with company X was Y.
You experienced incidents of bullying and harassment in the workplace.
You engaged lawyers in relation to those incidents and lodged a formal complaint.
You took leave from work as a result of the incidents and your health.
You incurred legal expenses in relation to those incidents during the 20XX and 20XX financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1