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Treatment of legal costs in CCMA

Posted 29 July 2015 under Tax Questions



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Mary says:
24 July 2015 at 8:19

Was unfairly dismissed and at CCMA employer agreed to retrench me. I received the correct tax directive. How do I claim the legal costs incurred to fight my employer? I am unemployment but received rental income from my properties during the tax year.

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TaxTimTaxTim says:
24 July 2015 at 8:45

Did the CCMA issue a directive on the costs and who should pay them?


Mary says:
24 July 2015 at 10:58

No. I had to pay it out of my settlement agreement, which was less than R 350k. IRP 5 issued by company with source code 3901/3698


TaxTimTaxTim says:
25 July 2015 at 14:34

What is the nature of your settlement?


Mary says:
27 July 2015 at 3:10

My unfair dismissal was converted to a voluntary retrenchment, in full and final settlement
an ex gratia amount of R 350 k was paid and tax of R80 k was deducted by my ex employee. I had to pay my own legal fees of R70 k. My pension withdrawal of R500k was converted to retrenchment with a tax directive issued / obtained by Sanlam. So how do I claim legal fees used to fight my ex company?


TaxTimTaxTim says:
28 July 2015 at 4:23

Yes you will be able to claim this amount, there is a space under the Other Deductions for legal expenses which you will include the fees under. Register for TaxTim and let us assist you in completing and submitting your tax return to SARS.


Mary says:
28 July 2015 at 15:28

The legal deduction was not taken into account by SARS in my IT34. What do I do now?


TaxTimTaxTim says:
29 July 2015 at 20:31

You can request a correction on your tax return and then under the Other Deductions section you would be able to add in the legal costs. Go to your Income Tax Working Page on SARS eFiling and RETURNS TAB then RETURNS History and select your tax return.


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