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Edited version of private advice
Authorisation Number: 1051752461450
Date of advice: 10 September 2020
Ruling
Subject: Deductions - legal expenses
Question
Are you entitled to claim a deduction for the legal expenses incurred?
Answer
Yes. The legal expenses directly relate to the gaining of assessable income and are deductible under section 8-1 of the Income Tax Assessment Act 1997 in the income year they were incurred.
This ruling applies for the following period:
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You were employed by Company A who went into liquidation.
You lodged a claim against the liquidator for unpaid entitlements.
Your claim was rejected and you disputed this by taking legal action.
You commenced legal proceedings to appeal against the rejection.
A settlement was reached and you were awarded a gross payment.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1