Can you deduct your home office expenses from tax?
The South African Revenue Services (SARS) have allowed workers working from home to claim expenses related to home office use, but only under specific circumstances. The Covid 19 pandemic has necessitated employees to adopt the stance of working from home remotely during the lockdown period.
As a result, many employees have had to set up dedicated workspaces in their homes to work efficiently and productively. As a result, many employees have incurred expenses in their personal capacity in order to conduct their normal work responsibilities, without the resources being made available to them in their normal work space. Many employees are accessing the viability of claiming these work space expenses incurred with the running of their home office as a tax deduction.
The Income Tax Act provides provisions in which these deductions can be claimed by individual taxpayers. If you have dedicated a specific room or part of your home solely for the use of work and trade purposes, you may be allowed to deduct certain home office expenses for tax purposes on a pro rata basis. View the specific guidelines on our blog here, to see if you can deduct expenses for tax purposes.
Do you meet these conditions?
If you have dedicated a specific room or part of your home solely for the use of work and trade purposes, you may be allowed to deduct certain home office expenses for tax purposes on a pro-rata basis. A room or part of your home will be considered to be occupied for the use of trade purposes if the following is met:
- The part of the house or room is specifically equipped for the purposes of your trade, namely your employment, profession etc.
- The part of the house or room is regularly and exclusively used for the purpose of conducting your trade.
Should the room and/or part of the dwelling or home meet the above requirements and your trade is constituted as employment, or holding of office as a salaried employee, a tax deduction is granted to you if:
- The income from your employment or office is derived from more than 50% from commission or other variable payments and you do not perform your duties for more than 50% of the time in an office environment; or
- You spend more than 50% of your work time performing your duties in your home office. No deduction is allowed when salaried employees perform only some duties at home, but work mainly from an office.
What constitutes home office expenditure?
The following list is the main expenses incurred for home office expenditure (this is not an exhaustive list):
- Rent of the premises;
- Cost of repairs to the premises;
- Expenses in connection with the premises;
- Phone expenses;
- Internet expenses;
- Stationary expenses;
- Cleaning expense; and
- Office equipment
The tax deduction available is calculated on a pro-rata basis on the area utilised for trade purposes. This equates to the square meters of the area of your home office divided by the total square meters of your entire home.
Expenses relating to the premises must be apportioned based on the floor area. These expenses include rent, interest on bond, rates and taxes, and cleaning. Expenses that do not relate to the premises such as furniture and equipment can be claimed in full and do not have to be apportioned.