YOUR GUIDE TO CLAIMING WORK FROM HOME EXPENSES FROM SARS

If you’re now working from home due to the pandemic, the good news is that you may be able to deduct certain home-office expenses for tax purposes.

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Working from home is becoming the new normal for many salaried employees (those who get less than half their salary from commission). These workers have now joined the freelancers, independent contractors and commission-earners who’ve always worked this way. If you’re among them, you may be able to claim for expenses, provided you fulfil the requirements laid out by the South African Revenue Service (SARS), or the equivalent in your country.

CONDITIONS FOR WORKING FROM HOME
In South Africa the following requirements are set out in the Income Tax Act for salaried employees, namely:

1. You practise a ‘trade’ – which includes ‘every profession, trade, business, employment calling, occupation or venture’. So, by simply being employed you satisfy this requirement, say tax consultant Laurence Mbokwane and tax attorney Elanie Nunez of Tax Consulting South Africa.
2. Your expenses have been incurred in the production of your income.
3. Your home office is not just a table in the corner of the lounge, but a room specifically equipped for you to do your job, which usually means it has a computer, printer, desk and chair.
4. You use it regularly and exclusively to do your job – not to watch TV, sleep guests, or even to store non-work related books or paperwork.
5. You perform more than 50% of your work duties in the home office (you work there for at least six months of the year).

THE EXPENSES YOU CAN CLAIM FOR

• If you can prove to SARS your compliance on these points, you may be able to deduct the following expenses from your income:
• A portion of your rent of the premises. (Calculate this on the percentage of floor area your home office occupies in square metres, relative to the total area of your home.)
• The cost of repairs and maintenance to the property, relative to the home office.
• Expenses incurred in connection with the premises, such as bond interest, rates and taxes, levies, electricity and cleaning costs.
• Cost of wear and tear on office equipment that you own. (SARS lists depreciation rates on computer equipment and office furniture on its website.)
• The costs you incur in running your home office, such as cellphone, bandwidth, fibre, internet and stationery, aren’t specified in the Income Tax Act, says Mbokwane, and SARS advises that these must be reimbursed by your employer. However, ‘commission-earners, sole proprietors and independent contractors will be able to deduct most of their business expenses,’ he says.

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HOW TO CLAIM
To claim for your home office deduction if you’re a salaried employee, you need documents proving you’re entitled to it.

• Get a letter from your employer confirming that you’re allowed to work from home and stating the reasons why.
• Keep a running spreadsheet of the days you work at home (as opposed to from your employer’s office) and keep careful records and details.
• Retain all the invoices and statements of your expenses.
• Have a building plan of the premises to indicate the floor area of your home office, and photographs.

You will need all this documentation when you fill in your claims, and may need to produce them if audited, says Nunez. This will happen if SARS decides to examine your tax return for the year more closely, to verify that your income and deductions are accurate, and this is more likely if you make home-office deductions. (SARS has said it will work hard to detect non-compliance.)

SARS requires that you retain records for five years after filing a tax return.

BE ORGANISED
Carry a separate wallet for slips from work expenses, and empty that each day into a labelled box or folder. Keep separate folders for each receipt category, such as equipment, repairs and stationery. SARS requires that you retain records for five years after filing a tax return.

Nunez and Mbokwane warn that claiming for a home office deduction can have adverse Capital Gains Tax implications if you own your home and later sell it, so discuss this with a tax consultant or accountant.

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NEED TO KNOW
DATES:
The 2022 tax year is 1 March 2021 to 28 February 2022; the 2021 tax year is 1 March 2020 to 28 February 2021. Individual tax filing dates were 1 July to 23 November 2021, and for provisional taxpayers, 1 July 2021 to 31 January 2022.

MORE INFO:
Call the SARS Contact Centre on 0800 00 7277 and select option 0, or visit sars.gov.za.

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