Edited version of private advice

Authorisation Number: 1051689724260

Date of advice: 28 May 2020

Ruling

Subject: Work-related legal expenses

Question

Are your one-off legal expenses (relating to an employment dispute) fully deductible, given their direct connection with gaining/producing income?

Answer

Yes, your expenses meet the requirements inSection 8-1 of the Income Tax Assessment Act 1997.

This ruling applies for the following period:

Year ending 30 June 2020.

The scheme commences on:

1 July 2019

Relevant facts and circumstances

You are a permanent, full-time employee.

You had a serious illness, were hospitalised and treated. You recovered well after rehabilitation and were given the all clear to return to work.

A few months later you were ill again, received medical treatment and returned to work.

Thereafter, your employer began treating you very differently and repeatedly engaged in behaviour/conduct, legally deemed to be discriminatory in nature, on the basis of your medical condition.

Your employer repeatedly breached confidentiality and your privacy.

Your employer refused to allow you to resume work as normal despite medical evidence saying that you were fit to do so; this action by your employer was legally considered to be discriminatory on the basis of an impairment/disability.

As a direct consequence, for the majority of the time you were absent from work you were not paid at all. This was because you were not allowed to work and had insufficient leave entitlements.

You did receive some income protection payments, but these were not on a regular/frequent basis.

Had your employer not discriminated against you and stopped you coming to work and, therefore, stopping your pay, it would not have been necessary to pursue legal action to get the matter remedied.

Consequently, it was necessary to engage legal counsel in order to pursue legal action.

You sought compensation for loss of income multiple times.

In a letter to your employer, from your lawyer, you sought among other things: payment of salary and employer superannuation contributions, payment of your legal fees, and a compensation payment for breach of privacy rights and disability discrimination.

Your complaint related to unlawful discrimination on the basis of a medical condition(s), which was a breach of the Disability Discrimination Act 1992, and as such, this is what the compensation was for.

This legal action eventually resulted in you receiving a compensation payment.

Your employment relationship continued to exist throughout, and your employment contract remained in operation.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1