Edited version of private advice

Authorisation Number: 1051798729373

Date of advice: 27 January 2021

Ruling

Subject: Legal expenses

Question

Are the legal expenses associated with the settlement of a dispute with your employer arising under the enterprise agreement an allowable deduction?

Answer

Yes. Taxation Ruling TR 2000/5 Income tax and fringe benefits tax: costs incurred in preparing and administering employment agreements sets out the Commissioner's view of the application of section 8-1 of the Income Tax Assessment Act 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 ended 30 June 2019

The scheme commences on:

1 July 2018

Relevant facts and circumstances

You are employed.

You are remunerated under the terms set out in an Enterprise Agreement.

You requested your union representative negotiate shifts that did not involve working with a colleague due to safety reasons.

Your employer complied and gave you separate shifts from your colleague from May to August 20XX.

In September 20XX you were in dispute with your employer as they no longer wished to comply with providing separate shifts from your colleague.

You engaged legal representation resulting in changes to your working arrangements lodged with the FairWork Commission.

Relevant legislative provisions

Income tax Assessment Act 1997 Section 8-1