Deductibility of Costs Incurred in Objecting to and Appealing against a Taxation Decision

Are costs incurred in lodging an objection and appealing to the Administrative Appeals Tribunal deductible under paragraph 25-5(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes. Costs incurred by the taxpayer in lodging objections against a taxation decision and appealing the matters to the Administrative Appeals Tribunal are deductible under paragraph 25-5(1)(a) of the ITAA 1997.

The taxpayer incurred expenditure regarding the lodging of objections. The taxpayer also incurred costs in appealing the unfavourable objection decisions to the Administrative Appeals Tribunal.

The taxpayer has incurred costs for professional advice and representation, gathering evidence, postage and telephone charges.

Paragraph 25-5(1)(a) of the ITAA 1997 permits taxpayers to claim a deduction for expenditure that is incurred in managing their taxation affairs. Section 995-1 of the ITAA 1997 defines the term tax affairs as meaning affairs relating to tax. The taxpayer is entitled to claim a deduction for the costs that have been incurred in lodging the objections and taking the matter to the Administrative Appeals Tribunal under paragraph 25-5(1)(a) of the ITAA 1997. The costs would be deductible in the year in which they were incurred.