SARS have over the years allowed the deduction of home office expenses in the determination of taxable income. However, due to COVID-19, a lot has changed, and many more employees are working from home. You can now qualify to claim your home office expense deduction when you submit your tax return, providing you meet the requirements as set out in the Income Tax Act. For more detail, you are welcome to visit the SARS website www.sars.gov.za
In short, here are the requirements that need to be met and what can be claimed for. If you do meet the requirements, you can ask the HR Department to send you a letter confirming that you work from home/remotely. This letter can be submitted when you do your Tax Return.
Requirements for a Home office
• The part of the home, i.e., the office space, for which a claim is submitted must be occupied for purposes of a trade (which includes employment).
• The office occupied must be specifically equipped for purposes of the trade, e.g. a home study, with a desk, computer, and so forth.
• The employee must regularly and exclusively use the office for business purposes, i.e. it cannot be used for private purposes. If an employee does not have a separate study or office available in their home, home office expenditure will not be allowed as a deduction.
• Employees who are not commission earners, but who spend most of their time on the road visiting clients, performing their duties mainly at their clients’ premises do not qualify for a deduction/claim of home office.
• The employee’s duties must be performed mainly, i.e., more than 50%, in their home office. (not applicable to commissions earners)
• The employer must allow the employee to work from home. Confirmation thereof will be a requirement upon Audit. (Not applicable to commissions earners)
Home office deduction
Expense of a capital nature are not allowed i.e. repayments on bond capital, limited to interest on the bond. The expenses must be actually incurred and in the tax year in question e.g. in 2021 tax year is from (2020-03-01 to 2021-02-28) and all expense incurred must relate to the home office. Below examples of expenses that can be claimed;
• rent of the premises
• interest on a bond
• rates and taxes
• other expenses in connection with the premises;
• phones (only commission earners can claim for phones).
• stationery (only commission earners can claim for stationery).
• wear-and-tear on office equipment
• Calculate the area of your home office as a percentage of the total area of your home.
• Apply this percentage to the total expenditure in respect of the home, e.g. rent, bond interest, water and electricity, rates and taxes, repairs.
• Add any other allowable expenditure, e.g. Wear-and-tear, etc.
• Ensure the calculation is available for SARS inspection, along with all supporting documents (invoices, bond statement, municipal bill, rental agreement etc.).
Article source: www.sars.gov.za