TO CLAIM OR NOT TO CLAIM – HOME OFFICE EXPENSES

Since the start of the COVID-19 pandemic, the way we work has changed dramatically, with many companies adopting hybrid working models. You may, therefore, have had to work from home regularly and may still be doing so, causing you to incur more expenses for managing your home office.

If you are a salaried employee who works from home and have set aside a room to be occupied for the purpose of “trade”, you may be allowed to deduct some of these expenses.

In order to determine whether you qualify to claim these expenses, you must meet rigid requirements outlined in the Income Tax Act, 58 of 1962 (“Income Tax Act”), namely;

1. The room which you use as your home office should be regularly and exclusively used for the purposes of your employment and be specifically equipped for that purpose. The home office must therefore be set up solely for the purposes of your trade and must regularly and exclusively be used for purposes of your employment. Consequently, if your home office is used as an office by day and a dining room by night, you will not be permitted to claim the tax deduction; and
2. Where your remuneration consists only of a salary and similar remuneration, your duties must be mainly performed in this part of the home, i.e more than 50% of your duties; or

1. If more than 50% of your remuneration consists of commission or variable income based on your work performance, more than 50% of those duties must be performed in a space other than that provided by your employer.

It’s important to note that not all of the home office expenses you have incurred can be claimed.  Section 23(b) specifies the types of home office expenses that are closely tied to the premises. For example, the rental of the premises, repairs to the premises and related charges such as rates, taxes, and cleaning costs are all included. You must, however, apportion your tax deduction to only the portion of the expenses that relate to your home office unless the expense is specifically incurred for your home office.

Examples of other home office expenditure that may qualify for a separate deduction by both salaried employees and commission earners are expenses such as general wear and tear on furniture, as well as equipment used in your home office for business purposes etc. 

The onus of proving that the expenses you have incurred qualify for a tax deduction rests with you as the taxpayer, and not with SARS. Should you claim a tax deduction for home office expenses, it is likely that SARS will verify this and will request supporting documents from you. There is even a possibility of SARS requesting photographs or visiting your home office before allowing the deductions.

To see if you qualify to claim home office expenses, you can click on the below link and complete the SARS Home Office Expenses Questionnaire: https://www.sars.gov.za/types-of-tax/personal-income-tax/tax-season/home-office-expenses-questionnaire/.