Seven legal expenses youâ€™re actually allowed to deduct
43984, 03 Nov. 2014
Tags: sars, deductions
A deduction is an amount SARS lets you deduct from your taxable income. This is usually the actual expense you’ve incurred and you can use it to reduce your taxable income in the year you incur it or over the period it applies to.
The good news is, you can deduct certain legal expenses you incur in the production of income.
Keep reading to discover the seven legal expenses you can deduct so you won’t make the mistake of deducting the wrong ones and inviting SARS penalties.
Good news: You can deduct these seven legal expenses
In terms of tax law, you can deduct:
- Fees for the services of legal practitioners;
- Expenses you incur while you obtain evidence or expert advice;
- Court fees;
- Witness fees and expenses;
- Taxing fees;
- The fees and expenses of sheriffs or messengers of the court; and
- Other litigation expenses that are of similar nature to any of the fees and expenses mentioned.
To avoid the wrath of SARS, always make sure the deduction is limited to the amount of the legal expenses that:
- Isn’t capital in nature;
- You don't incur for any claim made against you for the payment of damages or compensation; and
- You don’t incur the expense for any claim you make for the payment to you for any amount that doesn’t constitute income in your hands.
Remember, if you deduct the wrong expenses or claim too many incorrect expenses, SARS will refund you incorrectly and you could face a criminal record.
Don’t take any costly risks.
Now that you know the seven legal expenses you’re allowed to deduct, never deduct the wrong ones.
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