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Edited version of your written advice
Authorisation Number: 4140051280037
Date of advice: 25 June 2018
Ruling
Subject: Legal expenses
Question
Are you entitled to a deduction for legal expenses incurred to obtain, with a Total Permanent Incapacity claim, an Invalid Pension?
Answer
Yes, the legal expenses you incurred to obtain an invalidity pension resulted in you gaining assessable income. There is a clear connection between the assessable income and the expense. The expenses were not incurred in respect of income that was capital, private or domestic in nature.
As such, the legal expenses were incurred in gaining your assessable income and are deductible under section 8-1 of the ITAA 1997.
This ruling applies for the following period
Income year ended 30 June 2018
The scheme commenced on
1 July 2017
Relevant facts and circumstances
You were a member of a government run superannuation system.
Shortly after you left your work you started your invalidity claim using a firm of lawyers.
Almost two years later you received a letter from your superannuation fund stating that your pension became payable on the day after your invalidity retirement.
You have been paid arrears of the pension back to when you left work, and tax was withheld from the payment.
You are now receiving a pension from your superannuation fund.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 subsection 15-2(1)