If I qualify to claim Home Office (Code 4028) expenses and I want to claim this, what is applicable? Note that I own the house and I have the square meters of both my office and my house. My office adheres to the criteria. My question is related to the claim amount.
Tax specifies: A- the area in m2 of the area specifically equipped and used regularly and exclusively for trade divided by B- the total area in m2 of the residence (including any outbuildings and the area used for trade in the residence) multiply by Total Costs the costs incurred in the acquisition and upkeep of the property (excluding expenses of a capital nature).
My question is concerning the so called Total Cost. What is Acquisition cost? The current value of my house or the price I paid for it 12 years ago? Also I do not have a bond on my house? What can I then include in this Total Cost? Last year I was told by SARS Help Desk to use the Market Value of my house. Now I get a different answer and am totally confused.
Well now they are saying that if I do not have a bond I cannot claim anything as far as the value of the house is concerned? Last year was the first time I claimed home office and almost did the same thing this year until I tried to find out something related to this and I got this contradictory response. Last years' claim was however approved. I am now very confused as it seems you get penalized for not having a home loan!
TaxTimsays: 11 August 2013 at 21:37
Unless there's an actual expense to claim you cannot claim the cost of the home because this is capital expense. When you have a bond you are only able to claim the interest charges and not the actual bond. Last year did SARS request supporting documents?
Marinussays: 12 August 2013 at 5:41
Yes I had to upload the supporting information and I clearly showed the calculations on how the figure being claimed was derived.
TaxTimsays: 12 August 2013 at 21:13
It would appear that the you had different auditors with difference responses. I would not have said the market value of the house would be allowed as there is no capital allowance for individuals related to work premises. The SARS official who told you that was incorrect. What you could do is dispute this, given that you were allowed the claim last year, however SARS could open this up and then say that they were wrong last year and revise your assessment so this could backfire. The alternative is to use the total costs of the home, so all expenditure in the current year as the base for apportioning meterage cost.
Marinussays: 13 August 2013 at 5:40
I have done a lot of research now and also on your site and I now have a better understanding of what I can claim. So I will have to sit down and calculate what my expenses were and apportion that. The only thing is do you need receipts for everything such as having someone working in the garden and house - lets say once a week and you pay cash - they do not provide receipts.
Lastly I would not like to open up the matter with SARS as I now realize the information provided to me was wrong. I just want to make sure I do it correctly this time around because obviously it's important to complete your return correctly.
TaxTimsays: 13 August 2013 at 11:38
The issue with receipts is very difficult as if SARS does require proof then you would need to provide them. Often SARS does accept little things like that, but they do have the power to reject the claim. You must keep a spreadsheet of all the details to provide to SARS as well.
I agree, it really isn't worth the risk disputing as the penalties could be very high.
Marinussays: 16 August 2013 at 12:06
I fully agree! Thanks again for the feedback.
TaxTimsays: 18 September 2013 at 21:03
Only a pleasure!
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