Home Office Expenses SARS
Do you want to know how to claim for Home Office Expenses with SARS?
Whether you are a business owner or an individual, it’s important that you understand the tax implications of your home office. You may be able to deduct expenses related to your home office from your taxable income. This could include rent, cleaning costs, utilities and expenses for repairing the property. The deductions are available if you meet certain conditions.
Our team of experts has helped hundreds of businesses and individuals successfully claim their deductions, so we’re confident in our ability to help you too!
Please treat the information in our article as guidance and not as legal advice. Every personal situation is unique and needs to be discussed with your accountant or tax specialist.
To learn more about this topic please read through our article below. By clicking on the links below you can navigate to any part of the article which interests you.
- When can I claim home office expenses?
- What conditions must I meet to claim home office expenses?
- What home office expenses can you claim for.
- Examples of expenses.
- Important note.
- How to determine the costs of your home office expenses.
- Calculation method.
- Supporting documents needed to claim.
- What documents do you have to submit to prove the expenses?
If you are a taxpayer who works from home and has a room that is dedicated to your job, then the home office deduction will apply. The calculation is on a pro rata basis, as long as you fulfill the Income Tax Act’s conditions.
- You must set up the home office for work-related purposes only. You must also use this space frequently and solely for your work and you must furnish it particularly for that reason. For example, a home study with a desk, chair, and computer. and:
- If an employee’s earnings consist of a salary only and this area of the house is where you do most (50% or more) of your work. or;
- When commissions or variable incentives, depending on your job performance, account for 50% or more of your salary. And where you complete more than half of those responsibilities outside of an office supplied by your company.
What home office expenses can you claim for as per the Income Tax Act?
- The properties rent
- Expenses for repairing the property
- Property related expenses
Examples of expenses :
- Water and electricity
- Cleaning expenses
- Equipment for the office
Very important note :
According to the draft interpretation note (page 11) as provided by SARS : Telephone, internet and stationery expenses are not included in the home office deduction however commission earners claim it under a separate provision of the act.
Wear and Tear on office equipment is not dependent on whether a home office claim can be made. The claim is not apportioned and the full expense can be claimed as per the wear and tear allowance under section 11(e).
How to determine the costs of your home office expenses :
They base the tax deduction on the percentage of the house that is used for business, such as for work. The cost of the premises for the home office is determined on a pro-rated basis.
You can use this calculation method :
- A – the size in m2 of the area that is specially furnished and used for work on a regular and exclusive basis, such as employment.
- B – the residence’s total square footage in m2 (includes any outbuildings and the space of the home where the work is done).
- Cost Total. The costs of acquiring and maintaining the property (not including capital expenses)
It’s critical to emphasize that a return with a home office claim has a high chance of being selected for verification (especially if this is the first time you make such a claim) and the relevant supporting documentation would need to be submitted to SARS.
Supporting documentation needed to claim home office expenses :
- Do/did you have permission to work remotely? A letter from your employer stating that you are, or you could work remotely.
- Do/did you perform your work mainly from your home office? 50% or more of the work that is done must be from the Home Office. The burden of proof is on the taxpayer to prove this to SARS.
- Do/Did you have a dedicated space? You need a floor plan of the apportionment and photographs to prove it is a dedicated space that is adequately equipped. If documents are not sufficient proof, SARS may conduct a site visit.
- The calculation of the Home office deduction, i.e. the calculation depicting total valid expenditure apportioned by the pro rate percentage.
What documents do you have to submit to prove the expenses :
- Rent (lease agreement).
- Municipal charges (Municipal Statement).
- Interest (Bond Statement).