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Edited version of private advice
Authorisation Number: 1051881107610
Date of advice: 16 September 2021
Ruling
Subject: Deductions
Question
Are you entitled to a deduction for legal expenses to defend the termination of your employment?
Answer
Yes. Based on the information provided to the Commissioner your legal expenses are an allowable deduction as they were incidental or relevant to the production of your income.
The expenses are an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You were terminated from your employment.
You engaged a lawyer to sit in on all meetings and reply to correspondence from your former employer.
Due to the mental and financial toll it took on you, you did not pursue any further action such as unfair dismissal proceedings. You did not get your job back.
You paid an amount of money to your lawyers for their services in defending you against the allegations made towards you.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1