Updated work from home and tax changes for South Africa

As more South Africans work from home on a permanent basis, employees need to be aware of insurance and tax considerations, say experts.

A recent survey by recruitment agency Michael Page Africa found that 71% of local job applicants think that working remotely will be more important than before at the companies they are currently employed with.

Having said that, even if they had the choice, many employees would still come to the office for a part of the working week.

A separate Robert Walters survey found that about 40% of the respondents would like to work remotely on a full-time basis. Around a quarter (27%) indicated that they would want to work remotely at least half of the time.

“Whether employees are working from home two days a week, or four days a week, there are a few insurance and tax boxes that need to be ticked,” said Ricardo Coetzee, head of Auto & General Insurance.

“Before that though, it’s prudent to keep in mind the difference between home contents insurance and business insurance. Home contents insurance covers items used for personal use bought in your private capacity, whereas business insurance covers assets used for business, and which are purchased in the businesses’ name.”

Coetzee provided a breakdown of the updated work from home insurance and tax considerations to be aware of.

Insurance checklist

  • Who insures what?: If you purchased your work laptop or phone yourself, they need to be insured on your home or portable possessions insurance policy but these assets need to be specified as “items used for business purposes”. If these items were bought by the company you work for, they need to be insured by them.
  • Safety compliance: Make sure that you comply with all fire and electrical requirements set out by your insurer to safeguard yourself, your loved ones, your home and your work equipment.
  • Security compliance: Ensure that the security systems you have in place, such as linked alarms, meet the requirements set out in your insurance policy.
  • Could you pay less?: It makes sense that zoom-boomers working from home pay less for their vehicle insurance due to their reduced insurance risk. Ask your insurer if you qualify for a discount because you will be driving less.

Tax checklist

With a home office, you can claim – in proportion to the total amount of your home that is used as an office – for rent of the premises or bond payment, cost of repairs to the premises, rates and taxes, cleaning costs, garden services, electricity, insurance and security, subject to the following conditions:

  • The room is regularly and exclusively used for the purpose of trade and is specifically equipped for the purpose.
  • If your remuneration consists only of a salary, your duties must be mainly performed in this part of the home and – if more than 50% of your remuneration consists of commission or other variable payments based on work performance, or income incurred from running a business – then more than 50% of those duties must be performed in the designated area

Other home office expenditure that is not included above and may qualify for a separate, full deduction (except if there’s private use to account for) includes mobile and other phones, internet subscriptions, stationery, repairs and maintenance or replacement of office equipment, furniture and fittings, depreciation on office equipment and computer equipment, software expenses and insurance on specific assets.

Other home business expenses not related to the property, but tax-deductible (as long as you can prove that it was incurred in generating revenue, in operation of a business or in pursuit of new business) includes entertainment, subscriptions, marketing, advertising and promotion, training, office supplies, travel and accommodation (including toll fees, parking, fuel) and some motor vehicle repair and running costs.

Home office checklist

  • Pre-check: If you live in a complex or estate, it’s wise to check if the Body Corporate has any regulations in place for running a home office to make sure that you adhere to them.
  • Security: Shelves and drawers may work well for most documents, stationery and other accessories, but be sure to install a solid storage space – even a safe – for confidential items.
  • Safety: Make sure that you don’t overburden plugs, that you don’t block equipment’s vent systems and that all chords are tied together smartly to prevent a fire risk.

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Updated work from home and tax changes for South Africa