One of the effects of the global pandemic on many businesses has been the “migration” of the work force from external offices to home offices. Employers and employees have been forced to change the way they think about “going to the office” to work.
One thing we all agree on, is that the “show must go on” and work has to be done. Employers and employees have also realised that productivity and economic viability are not necessarily linked to the place of work. Many employers have decided that their employees should rather work from home.
Apart from the obvious logistical and productivity advantages, there is also a tax advantage for those employees who are now home-office based. The advantages of tax deductions are always enticing, but there are a few requirements that have to be met before any such deductions can be made.
SARS has set out guidance on this matter, which we have summarised below:
If you are an employee who works from home and have set aside a designated room/space that is occupied for the purpose of “trade”, you may deduct certain expenses incurred in maintaining a home office. The requirements that have to be met are set out in the Income Tax Act.
The gist of the minimum requirements is as follows:
- There has to be an area set up in your home that is exclusively set up for work (you can’t sit in your bed and claim office expenses…)
- Your home office must be specifically equipped with the equipment needed to perform your duties, e.g. office furniture, computer(s), printer, Wi-Fi etc.
- More than 50% of your working hours is spent in your home office.
- Your employer must provide a letter stating that you are working from home and that confirms the percentage of time that you have worked from home.
The types of home office expenditure that can be deducted have to be closely linked to the premises, such as:
- Rental of the premises/ interest on your house bond
- Cost of repairs to the premises
- Expenses linked to the premises e.g. Electricity
Other deductions in respect of maintenance would be expenses like:
- General wear and tear on items used in the home office
- Office equipment, furniture and fittings (and repairs to these)
- Internet / Wi-Fi
The calculation of the expenditure relating to the premises are calculated on the basis of “apportionment” (that means “a part in relation to the whole”)
In other words – you have to calculate what percentage of your home’s total floor area is used for work and use that percentage in your expenditure calculations. This only applies to the premises (rent/bond expenses, cleaning, utilities, rates and taxes and the like).
Expenses that are not directly connected to the premises do not need to be apportioned according to the floor area.
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