While we’re on the topic of tax, we thought it would be the perfect chance to talk through the topic of tax deductions. Particularly deductions that apply to those working from home, which many South African employees are still having to do.
According to the South African Revenue Services (SARS), employees are allowed to claim tax deductions for home office expenses, but only if they meet very specific requirements outlined in the Income Tax Act 58 of 1962.
What qualifies as a home office expense?
- Rent of the premises;
- Cost of repairs to the premises; and
- Expenses in connection with the premises.
Other home office expenses that may qualify for a deduction include:
- Phones;
- Internet;
- Stationery;
- Rates and taxes;
- Cleaning;
- Office equipment; and
- Wear-and-tear.
What requirements must be met in order to claim for home office expenses?
According to Section 23(b) of the Income Tax Act, a tax deduction for home office expenses is only allowed:
- If the room is regularly and exclusively used for the purposes of the taxpayer’s trade e.g. employment and is specifically equipped for that purpose. The home office must be set up solely for the purpose of working.
- If the employee’s remuneration is only salary, the duties are mainly performed in this part of the home. It therefore means you perform more than 50% of your duties in your home office.
- Where more than 50% of your remuneration consists of commission or variable payments based on your work performance and more than 50% of those duties are performed outside of an office provided by your employer.
How do I calculate my home office expenses?
If you meet the above mentioned requirements, you can calculate your deductions using the following calculations. If you’re not sure if you qualify, fill out this quick questionnaire provided by SARS.
A / B x total costs, where:
- A = the area in m² of the area specifically equipped and used regularly and exclusively for trade e.g. employment
- B = the total area in m² of the residence (including any outbuildings and the area used for trade in the residence)
- Total costs = the costs incurred in the acquisition and upkeep of the property (excluding expenses of a capital nature).
If you would like to know more about tax or tax deductions, please feel free to contact us!