Edited version of private advice

Authorisation Number: 1051918192612

Date of advice: 11 November 2021

Ruling

Subject: Legal expenses

Question

Are you entitled to a deduction for legal expenses?

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 assessable 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 assaulted in the workplace

You have taken leave from the workplace while legal action is being taken.

You are currently still employed with the same employer.

You engaged lawyers later in the year in which you were assaulted and have paid an amount in legal fees to rectify the matter with your employer.

Your legal team have acted on your behalf to negotiate your exit from your employment by way of a settlement.

You are seeking the following:

a.    The equivalent of several weeks wages in lieu of notice;

b.    The equivalent of several months wages, as an ex-gratia payment, for financial loss of wages and opportunity;

c.     General damages for non-economic loss, including, but not limited to, compensation for hurt and humiliation, significant damage to personal relationships, and other non-economic losses resulting from the conduct;

d.    Any accrued but unpaid wages owing to the date of resignation; and

e.    Any accrued but unpaid statutory leave entitlements owing to the date of resignation.

No settlement has been reached to date.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1