This Draft TR, issued Wed 11.4.2012, provides the Commissioner’s preliminary views on whether or not amounts received in respect of legal costs incurred in disputes concerning termination of employment can be included in assessable income.
The Draft indicates that an amount received in relation to a dispute concerning the termination of employment is not an employment termination payment (ETP), nor forms part of an ETP, where amounts are capable of being identified as relating specifically to legal costs.
Further, the ATO says where the legal costs are deductible under s 8-1 of the ITAA 1997, a settlement or award in respect of the legal costs will be included in the recipient’s assessable income as an assessable recoupment under Subdiv 20-A.
COMMENTS are due by 16 May 2012. ATO contact: Garry Keevers – Tel: (02) 9374 2174; Fax (02) 9374 2693; Email: garry.keevers@ato.gov.au.
[LTN 68, 11/4]