Raven Flip was employed by a major Australian bank as a loans manager. He was charged with writing fraudulent loans for

[answerhappygod]

Raven Flip was employed by a major Australian bank as a loans
manager. He was charged with writing fraudulent loans for fictional
customers and pocketing the loan proceeds once the loans were
granted. The criminal charge was receiving money by deception in
the amount of $10 million over a two-year period. Raven vigorously
defended the charges and was subsequently acquitted. While he was
defending the charges, he was suspended by his employer. Once he
was acquitted Raven felt unable to return to his previous
employment and started driving taxis. In defending the charges, he
incurred legal fees of $550,000 including GCT. It was subsequently
found that another employee at the bank had used Raven’s identity
to commit the fraud on the bank. As a result of widespread
notoriety of his acquittal which was published in the newspaper, he
was informed by his ex-employer about an article that Honest
Newspaper published in the newspaper regarding Raven. Once again,
Raven engaged his lawyers to bring an action, this time, in
defamation against Honest Newspaper for publishing an untrue
statement about him. Raven alleged Honest Newspaper caused harm and
emotional distress to him because of the publication in the
newspaper. Essentially, Raven sued the media broadcaster, Honest
Newspaper over an article published in the newspaper that alleged
him as a perpetrator in receiving money by deception. The newspaper
did not mention Raven was acquitted of the charges and in fact, it
was another employee at the bank had used Raven’s identity to
commit the fraud on the bank. The legal proceedings were commenced
in the Supreme Court of NSW, however, was settled at Mediation for
an undisclosed amount. Raven was invoiced by his legal firm,
$450,000 including GST for defending the claim against Honest
Newspaper. Subsequently, Honest Newspaper withdrew the article
published in the newspaper. Raven informed you that he incurred
these legal expenses as part of his income producing structure and
not income producing processes.
Required:
(a) Advise Raven whether the legal fees he incurred defending
himself against the original criminal charges were a deductible
outgoing. (10 marks)
(b) Advise Mr. Raven as to the deductibility of legal expenses
in relation to the defamation matter? (10 marks)