By Anja van den Berg
The SA Revenue Service (SARS) has confirmed that full-time employees who work from home will be able to claim home-office expenses during the Covid-19 pandemic.
If you as a taxpayer has incurred losses and expenses that are connected to your earning an income, you will be able to claim.
The expenses incurred by you as the taxpayer must be directly related to the business operation. For instance, if you are using your laptop and your work requires the use of electricity or data, those are costs related to the earning of your income.
According to SARS, employees can claim expenses for maintaining a home office if they meet the following requirements:
- You should have been working from home for six months or longer.
- Your home office must take up at least 20 square metres.
- You must have a dedicated workspace, which may consist of office stationery and equipment.
- The office space must be exclusively for performing work duties.
- Your human-resources personnel have to provide a letter stating that you work from home.
- You may be required to provide your lease agreement or your homeowner document.
- You should keep a slip or proof of payment of expenses.
Home office expense includes the following:
- rent of the premises
- interest on bond
- cost of repairs to the premises
- rates and taxes
- office equipment
The following are some points to consider when considering a claim:
- If your employer reimbursed you for data costs or stationery, you may not have to pay tax on these payments.
- If you’ve incurred expenses at the employer’s instruction for the employer’s trade, you must account for it to the employer to prove that those expenses have only been used for that purpose.
- If you are an employee that spends most of the time visiting clients in their homes or offices to perform your duty, you might not qualify for tax deductions.
- You must have a dedicated work area – you can’t just use your dining room table for work.
- You can claim for part of the interest on your bond, or part of the home rental, as well as municipal rates and taxes. This will take into account the floor space of your home office, compared to the total floor area of your house.
If you are a homeowner, claiming home-office expenses could cost you extra in capital gains tax (CGT) when you sell. For primary residences, the first R2 million of any capital gain on selling is not taxed. But if you tell SARS that part of your home isn’t a residence but an income-generating office, that part of your home is excluded from the capital-gains tax break.
Therefore, if you claim 10% of the floor space of the home as an office, 10% of the eventual selling price could be liable for CGT at a rate of 40%. However, the CGT calculation also takes into consideration the length of time over which you use your home office.
Business Insider: https://www.businessinsider.co.za/how-to-claim-home-office-expenses-2020-7
East Coast Radio: https://www.ecr.co.za/lifestyle/house-home/working-home-you-can-claim-home-office-expenses-sars/