Here’s how you can claim TAX on a home office

The 2023 tax season opened on July 7 2023 and closes – in two months – for individual taxpayers on October 23 2023. We chatted to the tax experts from TaxTim, about how to claim tax on a home office. Here’s everything you need to know …

CLAIM TAX ON A HOME OFFICE

Working from home, flexi-time, whatever you want to call it, the way we work has changed irrevocably since COVID. We even explored what would happen if South Africa had a 4-day workweek. What all this disruption to the usual 9am-5pm work schedules means is that you COULD conceivably claim tax on a home office.

TRENDING: End of the Rand? New BRICS currency on the agenda

But as TaxTim iterates, it’s very important you fully understand the tax rules around a home office. SARS may allow you to claim tax on a home office under “Other Deductions” on your income tax return (ITR12), but this is only allowed under certain conditions. For example, if you want to claim tax on a home office, it’s different for sole proprietors versus freelancers who work from home permanently.

DIFFERENT TYPES OF WORK

Whether you’re a sole proprietor, freelancer or commission earner, SARS will except a claim for internet and other work-related expenses. However, if you’re a salaried employee you are required to claim these from your employer. Got it? Okay, let’s continue.

ALSO READ: Pilot STUDY reveals what a 4-day workweek in SA would look like

Here’s what you need to claim tax on a home office:

• You need a letter from your employer allowing you to work from home. Download this letter HERE.
• You must spend more than half of your total working hours working in your home office.
• To claim tax on a home office, you must have an entire room in your home, which is used exclusively for the purpose of work. Working on the dinning room table, etc, does not count. It needs to be a separate space used specifically for work to qualify for a deduction.
• SARS is strict about this, often asking for evidence in the form of photographs and floor plans.

TaxTim warns, if you do not meet ALL of these requirements above, your attempt to claim tax on a home office will be denied.

WHAT EXPENSES CAN YOU CLAIM FOR YOUR HOME OFFICE?

This is where SARS will assess the taxpayer’s remuneration structure:

• A commission earner is someone who makes more than 50% of their total remuneration from commission or some other variable form based on their work performance. If you fall into this group you can deduct rent, repairs to the premises, rates and taxes, cleaning, and all other expenses relating to your house. Plus you can claim any business expenses (e.g. internet, telephone, stationery, repairs to printer etc.).
• A normal salaried employee is someone with variable payments/commission that makes up less than 50% of their total remuneration. If you fall into this category you can deduct rent, repairs to the premises, rates and taxes, cleaning, wear and tear and all other expenses relating to your house only. No business expenses, as these should be covered by your employer, says Tax Tim.
• Note that interest on bonds is no longer be allowed as a home-office expense as of the 2023 tax year onwards.

HOW DO YOU CALCULATE THE PERCENTAGE OF YOUR HOME OFFICE?

You must calculate the total square meterage of your office in relation to the total square meterage of your house as a percentage. Apply this percentage to the home-office expenditure in order to calculate the portion. The amount you get it what’s deductible.

EXAMPLE CASE

Let’s say you are a salaried employee and thanks to flexi-time you work three days a week from home. To kit your home office out you bought a computer and printer for R12 000 and R8 000 respectively. You can deduct those.

ALSO READ: Here’s why the BRICS currency will never work, say experts

Let’s say your home office is 20 square meters, and the floor space of her entire home (including the office) is 200 square meters. The home office is therefore 10% of the house.

During the tax year you might incur the following expenses:

• R120 000 rent
• R36 000 rates and electricity
• R36 000 paid to cleaner
• R5 000 roof repairs
• R12 000 cell phone expenses

Therefore your home-office deduction for the year could look like this:
10% x (R120 000 + R36 000 + R36 000 + R5 000) + R6 666 = R26 366.

If you need further assistance, we encourage you to use TaxTim’s handy Home Office Calculator HERE.

Don’t forget there are just two months left of tax season, which runs until October 23 2023 for individual taxpayers.

This article is for informational purposes only and should not be construed as financial, tax or legal advice. For further details consult the SARS website or get in touch with a tax specialist, like TaxTim.