Salaried employees have limited tax deductions available to them. However, home office expenditure can be claimed as an income tax deduction, but it’s your responsibility to prove that the expenses are in fact deductible.

Who can claim?

To qualify, you first need to prove your employment constitutes a “trade” and that your home office:

• Is specifically equipped for this purpose: Your home office must be equipped with the necessary tools and equipment required to render the trade (desks, chairs, computers, printers, trade-specific equipment, etc.). A lounge, living room, or empty, unoccupied room won’t qualify as a home office for purposes of this deduction;
• Is used regularly and exclusively for this purpose: Your home office space should not be used for any alternative purpose, such as a playroom for your children, as this would most likely disqualify the deduction. It should also be used regularly as opposed to occasionally; and
• Is where more than 50% of the taxpayer’s duties are performed: The Income Tax Act No 58 of 1962 doesn’t prescribe whether this refers to time or volume of work, but it can generally be accepted as the total working time.

Which expenses can you claim?

Expenses related to your home office will qualify for a deduction but are limited to the following: Rent of, cost of repairs to, or expenses in connection with any premises occupied for purposes of trade. Any expenditure incurred regarding repairs to the property must have some relation to the home office to be permitted as a deduction. These include:

• Rates and taxes, and any other municipal service charges such as sewerage and refuse
• Levies
• Electricity and
• Cleaning costs

Which expenses are not allowed?

Expenditures such as phone costs (including the monthly charges), stationery, furniture, computer, and communication equipment are not expenditures incurred in connection with the premises. In consequence, they fall outside of the scope of what is permitted by this deduction. Nevertheless, equipment may qualify for a wear-and-tear allowance.

Similarly, telecommunication costs, such as monthly subscriptions, fibre installation, etc., are not permitted as expenditures incurred in connection with the premises and cannot be deducted. Hopefully, this position will be remedied by SARS soon.

In the case of individuals whose remuneration is not mainly derived from commission, the latest Interpretation Note from SARS is important. This states that interest on bond expenses for the 2023 tax year onwards, will no longer be allowed as a home office expense.

What else should you be aware of?

SARS may request information pertaining to the home office of a taxpayer and might request the submission of photographs to confirm that the specific area of the home is mainly and exclusively used for purposes of trade.

Taxpayers should ensure that their home office is utilised exclusively by them (i.e. not jointly used as a home office with their partner) and for purposes of their trade.

Despite the administrative burden of this deduction, if the majority of your duties are performed in your home office it still makes sense to claim.

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