Q. Britney is sued by a copyright troll for alleged breach of copyright in respect of all the Tame Antelope songs that she has licensed to Sony Music. Horrified about the potential impact on her reputation in Perth society and the effective destruction of her copyright rights, Britney engages a lawyer to defend the copyright infringement action. She receives an invoice from her lawyer for $10,000 in legal fees.

Is the $10,000 deductible? Reference the ITAA.

This is my answer so far - am I on the right track here?

Britney can deduct from her assessable income any loss or outgoing as long as it is incurred in gaining her assessable income or is incurred in carrying on a business for the purpose of gaining her assessable income[1]. S8-1(1) is satisfied because the legal fees were brought about by being sued by a copyright troll, and therefore has an impact on her reputation, copyright rights, and assessable income. The $10,000 in legal fees is considered a deduction this section and she does not need to pay tax on it.

[1] Income Tax Assessment Act 1997 (Cth) s8-1(1)(a)(b)