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Ramphele disaster leaves DA wondering: Can we claim tax back on costly legal fees?

by , 03 February 2014
It's a political disaster. Last week, the news headlines were alight with the story that Mamphela Ramphele had joined the DA as their presidential candidate. But yesterday, news broke that this isn't the case. Now, the DA could face costly legal fees as, according to the Business Day, because the party now has legal issues it needs to clarify from the Ramphele's breach of good faith. Could the DA use this unfortunate turn of events to their advantage tax-wise? And could you if your company incurs costly legal fees?

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Is Ramphele joining the DA or isn't she?

That's the question on everyone's minds this morning as news that Ramphele 'reneged' on her and Zille's agreement to run as their presidential candidate broke yesterday.

According to Zille, while 'the DA negotiated with Ramphele 'in good faith',' reports the Mail & Guardian, she's now pulled the plug on that deal.

This act of bad faith could turn into a legal nightmare for both groups. After all any agreement 'implied [in the] covenant of good faith and fair dealing" which is breached by acts of bad faith, for which a lawsuit may be brought (filed) for the breach (just as one might sue for breach of contract),' explains Legal Dictionary.

And the same could apply to you.

If you're caught on either side of a deal gone south, listen up: Pursuing a legal case may be pricey, but there are a number of legal fees you can claim tax back from SARS.

So which legal fees are tax deductible?
 
According to Natalie Cousens of Tax Watch, you can claim tax back on legal fees as long as you incur them in the course or by reason of ordinary operations. These include:

  1. Expenses for the services of legal practitioners
  2. Expenses in procuring evidence or expert advice
  3. Any court fees
  4. Witness fees and expenses
  5. Fees and expenses of sheriffs or messengers of the court

And those are just the start. There are a number of other legal fee deductions that can work to your business's advantage. And that means, if like with the DA, it makes sense to pursue a legal case, maybe you should.

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