Flexible employment is becoming increasingly popular, many taxpayers spend some (or all) of their time working from home. If certain conditions are met, taxpayers are allowed to claim a portion of their office running costs as a tax deduction on their tax return. However, please note that SARS usually flags these returns for audit. If you do work from a home, take a read of our home office blog and also check out our handy decision tree to make 100% sure you are claiming this expense correctly.
We often receive questions on our Helpdesk about home office deductions. Hopefully these FAQs will help you as we attempt to shed light on these common tax deductions:
1. I'm a web developer and I use a separate room (a study) for work. My earnings are a straight salary - can I claim a home office deduction on my tax return?
Yes, you may claim a deduction for the home office expenses you incurred, as long as the study is used for business only then you can give SARS a letter from your employer stating that they need you to work from home more than 50% of the time.
2. I work for 4 companies as a freelancer and I have a separate room in my house where I have setup a desk, desktop PC and a printer. Seeing as I have 4 different sources of income, can I claim a home office expense against each separate trade? Or should I just enter the total home office expense under the “other expenses” section on my return?
You'll have to declare the 4 separate incomes on your return, each under the local business section and here you'll declare a portion of your home office claim under each trade too. Seeing as you're not employed by an employer and don't receive an IRP5, you unfortunately can’t enter the home office expense in the “other expenses” section on your tax return.
3. I leave work early to avoid traffic, and then continue working at my kitchen table. My employer will give me a letter stating that they need me to work from home, but can you tell me which expenses I can claim for?
Do you have a separate office at home too? If not, you unfortunately can’t claim a deduction for working from home, as the kitchen table is not setup solely for your home office purposes.
4. I'm a commission earner. I have a home office and receive rental income. My tenants didn't pay me for the last 3 months - can I include this in the home office expenses section?
You unfortunately can’t claim the lack of rental income under the home office expenses section on your return. This is because the rental income activity is separate from that of your home office use. You can however, include it as a bad debt in the rental income section on your return.
5. I'm not employed, but I manage three rental properties and receive rental income from them. Can I claim a deduction for home office?
Yes, you can claim this deduction, please include it under the three rental sections on your return. There are a few other expenses that you claim under the rental section on your return too, please refer to our blog on Rental property deductions.
6. I'm a 100% commission-earning employee who runs all my business activities from my residence. I estimate my business share of home expenses as being higher than simply the size of my office as a percentage of the house floor space. Can I include more area, such as the kitchen (used for meals during office hours) and the dining room (used for meetings)? Is floor space the only apportionment method?
For rental deductions and related costs, which are part of the home, only the floor space apportionment method is available. For direct costs of equipment, which only relate to the office then 100% of the expense can be deducted. Dining room and kitchen expenses are personal for meals and so cannot be deducted. Meetings are a difficult one and if you can prove to SARS a certain percentage of the room is used for meetings over a number of days of the year then you can allocate that way, but SARS may come back to you and say this isn't appropriate.
7. My home office is 3m by 4m. I'm not sure how to calculate the rates and electricity for the office?
Please refer to the example below:
Rates (R2,400) Electricity (R1,500) = R3,900
House is 60 square metres
Office is 3m x 4m = 12 square metres
Portion = R3,900 x 12 / 60 = R780.
8. I’m a normal salaried employee (not a commission earner). I work from home in a dedicated office four days a week, and I travel to the office one day a week. I tried to claim for a home office, and on my tax return I got the message "Home office Expenses disallowed". No reason was given. I've tried querying, but they give me a case number, but never resolve the query. My employee contract is very old, and doesn't have the arrangement in. Can I give a letter from my employer as proof? What other documents do I need?
Please go through our handy decision tree to ensure you are eligible to claim expenses and to see which ones you can claim.
If you do qualify for the deduction, you would need a letter from your employer stating that they allow you to work from home and the hours you spend there as well as the fact that you are a salaried employee (and not a commission earner). In addition, your employment contract should be amended if possible and also submitted as proof.