Home Office Expenses SARS & Tax Deductions – What can you deduct?
With the 2021 Tax Season about to open you might be wondering, what can you claim for home office expenses due to working from home in lockdown. The good news is yes, taxpayers will now be able to deduct their home office expenses in the 2021 tax year of assessment.
To be able to claim home office expenses you would need to reach the requirement of 50% or more of total work time being spent at home in a home office. Previously taxpayers would not qualify purely due to the fact that they were office-bound and the overtime worked at home never qualified for the deduction. Due to the lockdown and taxpayers working mostly from home it has now resulted in many qualifying for the home office expenses deduction.
What are the requirements?
There are 2 essential requirements to qualify for the home office expenses deduction.
1st Requirement - Exclusive use
You need to use a room exclusively for the purposes of your work. This means you can’t claim the deduction if you simply have a desk in your bedroom or work at your dining room table.
The office should be set up for the purposes of your work and must be used for your work only in order to qualify for the deduction.
2nd Requirement - 50% Rule
The home office should be used for more than 50% of your working time (based on hours of a normal workday).
Which expenses may a taxpayer deduct?
Home Office Expenditure as referred to in section 23 (b) of the Income Tax Act includes:
- Rental paid for the premises;
- The interest paid on your bond;
- Repairs and Maintenance of the premises; and
- Any other expenses in relating to the premises.
- Telephone and Internet expenses
- Printing and Stationery
- Rates and taxes and other utilities;
- Cleaning expenses;
- Office equipment; and
- Wear-and-tear of assets
How is the Home Office Expense Deduction calculated?
The deduction is based on the size of the home-office in relation to the total size of the under-roof area of the premises. This means that an apportionment rate must be calculated.
For example:
Office space = 15 square meters
Total under-roof space = 150 square meters
Apportionment rate = 15/150
* Important to note that some expenses are directly related to work and can qualify for 100% deduction ie. printing and stationery costs.
Once you have the apportionment rate this is applied to all the shared expenses as listed above to calculate what the home-office portion of the expense is.
Formula to use for shared expenses:
Deduction = A / B x Total Costs
A = the square meter of the office
B = the square meter under roof of the premises
Total costs = costs incurred in the upkeep of the premises and some of the acquisition costs of the property (excluding capital expenditure)
Zeelie Professional Accountants SA has a dedicated Tax Department with Registered Tax Practitioners who are registered with SAIT – The South African Institute of Tax Professionals. Call us today on 021-180-4616 or email: info@zeeliepasa.co.za for assistance with your Individual or Company Tax.
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