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Edited version of your written advice
Authorisation Number: 5010056678492
Date of advice: 25 January 2019
Ruling
Subject: Legal expenses incurred in defending a business
Question
Are the legal expenses incurred in defending the business deductible?
Answer
Yes. The legal expenses you incurred arose out of the need to defend your actions whilst carrying out your duties through which you gain or produce assessable income. The legal expenses are therefore deductible under section 8-1 of the Income Tax Assessment Act 1997.
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You are a registered agent
The spouse of one of your clients commenced legal action against you and commenced proceedings with the relevant regulatory body to have you de-registered
You incurred significant legal expenses in defending the claims made and avoiding deregistration.
The costs were paid by you personally and you were not reimbursed by your company or your business insurance.
As a result of the defence mounted by your lawyers the legal action was unsuccessful and the deregistration request withdrawn.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1