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Edited version of private advice
Authorisation Number: 1052373488421
Date of advice: 17 March 2025
Ruling
Subject: Legal expenses
Question 1
Are you entitled to a deduction for legal advice sought regarding an internal work matter with the Commonwealth Ombudsman and your involvement and potential liability?
Answer 1
Yes.
Based on the information provided to the Commissioner, the legal fees you have incurred relating to the internal work matter with the Commonwealth Ombudsman are an allowable deduction.
The legal fees are deductable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as they have the relevant nexus with your income earning activity.
Question 2
Are you entitled to a deduction for legal advice sought regarding defending your employment rights and actions taken during your employment?
Answer 2
Yes.
Based on the information provided to the Commissioner, you can claim a deduction for the legal fees you have incurred in defending your employment rights and actions.
These legal fees have the relevant nexus with your income earning activity and are therefore an allowable deduction under section 8-1 of the ITAA 1997.
Question 3
Are you entitled to a deduction for legal costs incurred in defending the way you performed your employment duties?
Answer 3
Yes.
Based on the information provided to the Commissioner, you are entitled to a deduction for the legal fees you incurred in defending the way you performed your work duties.
The legal fees have the relevant nexus with your income earning activity and are therefore an allowable deduction under section 8-1 of the ITAA 1997.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You had a managerial role with Employer Z.
A disclosure was made to the Ombudsman X years ago.
The disclosure was related to your role.
The public interest disclosure related to the conduct of an Employer Z employee at a social gathering and your handling of their conduct when it was brought to your attention by Employer Z employees.
The matters were raised with you by the Ombudsman and an investigation into the matter continued for X months.
The investigation related to decisions made and actions taken by you in your role and you participated in an interview with the Ombudsman.
The Ombudsman also put several written statements to you, to which you were required to respond.
Significant legal fees were incurred responding to the public interest disclosure made to the Ombudsman and the written statements put forward by the Ombudsman.
The first time you received written documentation from the Ombudsman (to which you were required to respond) was over X months after the initial disclosure.
The Ombudsman finalised its review in the following year.
Legal costs were incurred and paid related to responding to the Ombudsman and defending your employment rights with your employer.
Since those matters, you have incurred further legal expenses.
You resigned from your position with Employer Z.
There are ongoing matters related to your former employment which you are still seeking legal services for.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1