How to claim work from home expenses for tax: SARS
The South African Revenue Services (SARS) says that workers are allowed to claim for home office expenses – but only under very specific circumstances.
The tax collector said that these deductions are outlined in the Income Tax Act as follows:
- If the room is regularly and exclusively used for the purposes of the taxpayer’s trade e.g. employment, and is specifically equipped for that purpose. The home office must be set up solely for the purpose of working.
- If the employee’s remuneration is only salary, the duties are mainly performed in this part of the home. It, therefore, means you perform more than 50% of your duties in your home office.
- Where more than 50% of your remuneration consist of commission or variable payments based on your work performance and more than 50% of those duties are performed outside of an office provided by your employer.
In an updated guidance note published on Wednesday (17 November), SARS provided a further breakdown of who qualifies and under what circumstances.
The full guidance note and some of the key issues are detailed below. More information about tax and working from home can be found on SARS’ website here.
What documents do I need?
SARS said that the following should be included:
- Letter from employer permitting remote work – including the period that remote work was allowed and where available dates that the employee did not report to the office.
- Floor plan showing dedicated space and calculation of proportion in relation to total buildings on the property – this does not need to be a municipal or council plan of the home, but can be an informal but accurate drawing of the floor plan.
- Photographs showing dedicated space, specifically equipped.
- Schedule showing calculation that work was mainly from home – in other words, showing that more than 50% of all work for the year was from the home office, including any supporting evidence.
- Actual invoices of claimed expenses with proof of payment.
- Schedule of amounts claimed and apportionment calculations.
If I have to pay for a dedicated Wi-Fi/internet link for my home office, would this be claimable?
Wi-Fi equipment that is owned by a taxpayer may qualify for a wear-and-tear allowance.
Other Wi-Fi expenditures, for example, monthly subscriptions and certain installation charges, are not permitted as a deduction for home office purposes, SARS said.
If you only use a portion of your bedroom for your home office, are you eligible to claim for a home office?
“The home office must be exclusively used for purposes of the trade,” SARS said.
“A taxpayer will find it very difficult to prove that a portion of his or her bedroom is used exclusively for purposes of trade, and thus would not qualify for a home office deduction.”
What exactly does the employer need in the letter to SARS that confirms the employee’s work from home arrangement?
- The letter should be on the letterhead of the employer with their registration details including the PAYE number.
- The letter should provide the employee details and specify the period (start and end dates) when the employee was allowed to work from home.
- The letter should, where possible, indicate the dates during the year that the employee reported to the employer’s premises.
I have a full-time domestic helper who cleans my home office space daily and I pay her cash at the end of the month. What proof would you require in this instance?
Proof of payment must be retained, SARS said. “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.”
Is it possible for me to claim for home office if I have already submitted my returns for 2021?
This is possible in certain circumstances, SARS said. Return submissions often allow for a “request for correction” upon realising that you have omitted certain information or made an error.
Alternatively, you could lodge an objection, provided it is lodged within the prescribed time limits, it said.
How are home office expenses calculated?
Home office expenses are calculated on a pro-rated basis – the square meters of the area of home office versus the total square meters of your home.
Should you qualify for a deduction in respect of home office expenses, the amount must be calculated on the following basis: A / B x total costs, where:
- A = the area in m² of the area specifically equipped and used regularly and exclusively for trade e.g. employment
- B = the total area in m² of the residence (including any outbuildings and the area used for trade in the residence)
- Total costs = the costs incurred in the acquisition and upkeep of the property (excluding expenses of a capital nature).*
“Note that only expenses relating to the premises must be apportioned based on floor area, such as for example rent, interest on bond, rates and taxes, cleaning, etc.
“Expenses that do not relate to the premises (such as wear and tear on equipment and furniture) do not need to be apportioned based on floor area,” SARS said.
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