Amid some recent uncertainty, the SA Revenue Service has confirmed that full-time employees will be able to claim home-office expenses during lockdown.
Typically, people who earn commission and independent contractors claim these expenses.
But full-time employees can also claim if they work from home for at least six months of the tax year. This means that you would have to work from home at least until the end of September, if you left the office at the start of the national lockdown.
If an employee’s duties are mainly performed from their home, they will be able to claim some expenses, a SARS spokesperson confirmed to Business Insider SA.
“To take a simple example, if an employee works normal office hours for a single employer for the tax year from 1 March 2020 to 28 February 2021, this requirement will be met if the employee performs their duties from the home office for more than half the year,” the spokesperson said.
However, your home office must be specifically equipped for work – and “regularly and exclusively used” for such purposes, he added. This means that you must have a dedicated work area – you can’t just use your dining room table for work.
These are some of the expenses you can claim for a home office:
- Part of the interest on your bond, or part of the rental of the home – as well as municipal rates and taxes, including water and electricity. This will take into account the floorspace of your home office, compared to the total floor area of your house. If, for example, your home office is 20 square metres and your house is 200 square metres then you can deduct 10% of the qualifying expenses such as rates and taxes or interest payable on bonds. You can’t deduct all your expenses.
- You can also claim for stationery, and data costs.
- Wear and tear on office equipment.
Importantly, if you own your home, claiming home office expenses could cost you in extra capital gains tax (CGT) when you sell.
For primary residences, the first R2 million of any capital gain on selling is not taxed. But if you tell Sars that part of your home isn’t a residence, but an income-generating office, that part of your home is excluded from the capital-gains tax break.
So if you claim 10% of the floorspace of the home as an office, then 10% of the eventual selling price could be liable for CGT, at a rate of 40%. However, the CGT calculation also takes into consideration the length of time over which you use your home office
In addition, if your employer reimbursed you for data costs, stationery or other expenses – you may not have to pay tax on these payments.
“(An) employer’s reimbursement of an expense incurred by an employee is not taxable if the expense has been incurred at the employer’s instruction, for the employer’s trade, and the employee must account for it to the employer to prove that it has only been used for that purpose,” the SARS spokesperson said.
Examples of reimbursed expenses that would not be subject to tax would be data bundles purchased to work from home and stationery used for work purposes.