Is unpaid salaries included on my IRP5 not deductible as a bad debt?

Salary that was due to me, however not paid by my previous employer was included as income on my IRP5. I included it as a bad debt deduction & SARS disallowed in my assessment. Please advice as to what I can do.

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TaxTim TaxTim says:
15 November 2012 at 10:24

Unfortunately you can only claim a bad debt deduction if you had earned income in the year before, declared and paid tax on it and now you never received that money because the person isn't going to pay you. So unfortunately you would only be able make this claim in the 2013 tax year.

Are you able to recover this from your employer?

Zinger says:
16 November 2012 at 1:45


I have tried recovering from my employer with no success and sort of gave up on it.

I actually included under bad debts in my returns an amount that was due in Jan 2011 and included in my income(irp5) in 2011 tax year.

SARS disallowed this amount for 2011. When I called the call centre, I was told that it will not be allowed and that bank statements and a schedule showing this are not sufficient proof that this money was never paid. So, I dont know what else to submit as proof as they say that the employer could have paid me by other means unknown to them.

They say, I need to request a correction for my irp5 from my employer for the previous and current year. Alternatively, I was told if I have no success with this, I must phone the fraud line.

I was intending on claiming the unpaid salary for this year in the 2013 tax year.


TaxTim TaxTim says:
17 November 2012 at 12:46

You can try for 2013, but based on what was said to you it would appear that SARS will disallow the claim. The other avenue, as suggested is to go to the police and report your previous employer and sign an affidavit. In this way you have formally laid a complaint and should be able to have a better chance of claiming the loss because there is an actual police case open.

I'm sorry I do not have a better solution!

Zinger says:
17 November 2012 at 22:19

Thanks for your input.

Its appreciated.


TaxTim TaxTim says:
18 November 2012 at 20:24

Always a pleasure!

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