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 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.
Below are some FAQ from taxpayers:
1. I am a salaried employee and I have been working from home since the start of the Covid pandemic. Can I claim my internet/data costs/fiber costs?
No, unfortunately you cannot incudes these costs as part of your home office deduction. SARS have recently made it very clear, that they don't view these as costs relating to the property. It would be advisable to approach your employer to reimburse you for these costs you have incurred.
You can however, claim these IT costs if you are a commission earner (i.e commission income makes up more than 50% of your remuneration) as these costs would be considered commission related business expenses. Remember to estimate the % of business and personal use and only claim for the business portion.
2. I have been working from home since the start of the pandemic. I use my cell phone for work calls. Can I add cell phone expenses to my home office costs?
No, unfortunately you cannot incude these costs as part of your home office deduction.
You can however, claim phone expenses if you are a sole proprietor or a commission earner (i.e commission income makes up more than 50% of your remuneration) as these costs would be considered commission related business expenses. Remember to estimate the % of business and personal use and only claim for the business portion.
3. I have a one-bedroom house with an exclusive office area in my bedroom (office table, office desk and shelves) which I use only for work. Will I still able to apportion and claim home office costs or does the law require a "room"?
This question was recently raised to SARS as it is particularly relevant for many employees working from home during the pandemic. SARS made it very clear that it will be extremely hard to justify that an area/space (which is not a separate office) has been specifically equipped for the taxpayer's trade and is 'exclusively' used for this purpose. They have said they may request floor plans and photos and the onus will be on the taxpayer to prove its exclusive use. You would need to weigh up the potential tax benefit (which would be relatively small given the size of the 'area' ) versus the time and administration cost involved with filing disputes to SARS which may be required in order to justify claiming this expense.
4. 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. You would also need to provide a detailed schedule which lists your home office expenses, a calculation of your deduction as well as all supporting invoices.
5. My employer reimbursed me for telephone and internet, can I claim these on my tax return?
No, you cannot claim any costs that are reimbursed by your employer. You can only claim the business portion of your telephone and internet costs if you are a commission earner and you paid them yourself.
6. Can I include a portion of my bathroom and kitchen when calculating the square meterage of my home office?
No, SARS will not allow this area to be included. Your home office area comprises of the square meterage of your office only.
7. Can I include gardening costs in my total household costs?
No these cannot be included as it would be very difficult to justify to SARS that your garden forms part of your home office.
8. Can I include tea, coffee and snacks as part of my home office costs?
No, these are all personal costs which do not form part of the deduction.
9. 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.
10. 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 and you probably won't be spending 50% of your work day from home anyway.
11. 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.
12. I am 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.
13. 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.
14. 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 gave me a case number, but never resolved the query. My employement contract is very old, and it 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.
15. My water and electricity and complex security is included in my levy, while rates and taxes are separate. Is it OK if I don’t provide a electricity or water bill specifically?
You must provide supporting invoices for all expenses that you claim. For example, if you don't have a utility bill, you can provide an invoice from your body corporate reflecting the levy. SARS are also requesting all taxpayers to provide a utility bill reflecting their physical address. If you cannot provide one because you rent or these expenses are included in your levy, then you need to provide an affidavit explaining this to them.
16. My domestic worker does not invoice me and I pay her in cash. How do I claim for cleaning?
Proof of payment must be retained. The domestic worker should sign an acknowledgement of receipt of the monthly payment. As an employer, you would be required to register for UIF for the domestic worker, proof of payment of UIF contributions may also be requested on audit or verification by SARS.
17. Is there a limit to Repairs and Maintenance that I can claim?
No, however they have to relate to the home office only. If the expenses are extensive and relate to an improvement/renovation (i.e they increase the income earning capacity of your property) then they are not deductible in the tax year; instead they are added to the base cost of the property and will reduce capital gains tax when you sell it one day.
18. If I don’t have proof of purchases for office equipment prior to this tax year, may I claim for wear and tear?
No, you do need to submit a purchase invoice or proof of payment to claim wear and tear to prove that you bought the equipment. Please refer to our Wear and Tear Calculator.
19. If I don’t have my physical invoices (e.g Builder’s Warehouse for house maintenance) – are the scanned in versions sufficient?
Yes this is sufficient as all invoices are scanned to SARS anyway.
20. I have heard that SARS are being very strict with what exactly can be claimed as a home office expense. What do they specifically NOT allow?
SARS have specifically stated that they will NOT allow internet, water, sewerage, refuse, gardening and office beverages/snacks to be claimed.
21. If I have solar power during the day, how can I claim because I don’t have receipts for that power?
If you have not spent anything on the power during the tax year, you cannot claim a deduction.
22. My husband and I both work from home and we share an office, which is not used for anything else. Does this meet the 'exclusive use' requirement, or should we each work from a separate office/room in order to claim a home office deduction?
You can each claim a deduction only if the office is clearly divided for each of your work areas. You will need to provide photos to SARS which proves that you each have your own, separate, 'exclusive use' work areas. If you share a desk for example, then the exclusivity requirement won't be met and neither of you will be able to claim.
23. SARS has requested floor plans of my house, but I am unable to obtain the municipal plans. What should I do?
If you cannot provide council plans, SARS will accept an informal, but accurate, drawing of the floor plan of your house which clearly shows the area of your office as well as your total property.
24. I heard that taxpayers can no longer include their interest on bond charges in their calculation of home office costs. Is this true?
SARS have stated in their latest Interpretation Note, that interest on bond expenses will no longer be allowed to be included as a home office cost from tax year 2023 onwards. Regulatory bodies in the industry do not agree with this approach and are challenging SARS. Taxpayers can continue to claim their interest on bond expenses in 2022.
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