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Am I entitled to claim home office expenses?

Posted 27 January 2013 under Tax Questions

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- I am a web developer.
- I use a separate room (a study) for work.
- My earnings are *not* commission-based.
- I pay rent for the study (to my parents)
- The study (and the PC etc.) is used /- 85% of the time for work purposes (therefore technically not "exclusively")

The requirements are very gray. Firstly, why must it be commission-based income? Secondly, why must it be exclusive-use if I could simply calculate business-use as a percentage? (for example, if I pay R2 000 rent and use the area 85% of the time for business, I should be able to claim R1 700, right?)

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TaxTimTaxTim says:
29 January 2013 at 21:06

The interpretation notes to the governing section of the law section 23(b) state that the room has to be specifically used for work purposes and needs to be fitted out as such. The idea is to prevent taxpayers from claiming deductions for keeping a a laptop on their coffee table and calling it an office and therefore paying their bond with a tax deduction.

In your case you are paying rent for a room and if you can clearly demonstrate that you have a demarcated area within your room that you rent which is solely dedicated to work then you would be able to claim that as a rental deduction. The claim is not on a use basis, but on a size basis. The portion of the "home office" to the overall space rented and paid for.

Glen says:
29 January 2013 at 21:49

My case is a little different, because I'm paying rent for the office space only (not for the rest of the house), therefore the portion of the rented space is effectively 100%.

I'm going to claim the full amount.

TaxTimTaxTim says:
29 January 2013 at 22:35

The "office space", from what you have said previously, is used for other purposes as well in which case if SARS request supporting documentation or further proof of the claim you would need to substantiate this with a calculation and show you have gone through the steps to identify whether you can actually claim the expense as a deduction. If it is found that you were not entitled to you can face a penalty of at least 50% of the tax saving of the deduction for "not taking due care in completing your return"

If there is a specific office in the house and you use that and pay rent for that office then that would be acceptable.

Glen says:
30 January 2013 at 10:22

There is a specific office that I pay rent for, but the area is used 10-20% of the time for non-business purposes (it houses my PC, so when I'm not working [weekends, etc.] I sometimes use the PC for personal reasons).

I think I will send this question to SARS as well, and if they don't reply, then at least I can say that I did everything that I could to determine eligibility (and that I've taken "due care").

TaxTimTaxTim says:
30 January 2013 at 11:35

In the case where there is occasional non-work activity then SARS allow that, the 80/20 rule often applies so you should be in the clear. I doubt you will get a reply from SARS, but your claim seems justifiable.

Glen says:
30 January 2013 at 11:54

Excellent, I really appreciate your input.

BTW, my e-mail to SARS bounced (mailbox full), so I definitely won't be getting a reply from them.

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