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A civil servant enquired whether overtime back pay received in 2021 for services rendered in 2018, 2019, and 2020 should be taxed in 2021. The DGT ruled that these payments must be attributed to the years in which the services were performed, as they were due during those periods.
This ruling clarifies the timing of tax liability for back pay, ensuring that income is reported in the tax year it was earned and due, rather than when the cash is actually received.
The tax team reviews your specific situation.
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