Tax season could offer a relief for employees working from home

With the Income Tax season opening for taxpayers to file, some South African individual taxpayers will now be eligible to claim for working from home expenses. According to the South Africa Revenue Services (SARS), employees who have been working remotely can now claim for expenses incurred whilst working from home.

In previous years, the working from home expense claim applied to freelancers and contractors. However, between the period 2020-2021 most employees started working remotely from home and some even set-up office solely for working due to Covid-19 and the imposed lockdowns. It is no brainer that such a tax rebate could potentially come as a relief for most taxpayers during these Covid-19 times.

Who qualifies for claiming for working from home expenditure?

According to Section 11 (a) of the Income Tax Act (ITA) you qualify for working from expense claim “if you are an employee who works from home and has set aside a room to be occupied for the purpose of “trade”, e.g. employment, you may be allowed to deduct certain home office expenses for tax purposes calculated on a pro-rata basis.”. SARS also provides clear guidelines on how to calculate the expenses apportioned to working from home which need to be supported by documents such as invoices, bond statements, a valid lease agreement, and utilities bill.

Who qualifies for claiming for working from home expenditure?

  1. If you have a separate room set up for only office use and only use that room for “trade”.
  2. If as a salaried employee, you perform more than 50% of your duties at home.
  3. If your remuneration is based on commission and you are performing more than 50% of your duties from.
  4. Your employer must allow for working from home

SARS has also provided a list of expenses that fall within the working from home expenditure, and these consists of, rent of the premises, cost of repairs to the premises, expenses in connection with the premises. Other expenses include phones, internet, stationary, rates and taxes, cleaning, office equipment, and wear and tear on either furniture of equipment related to work.

Whilst it may be an opportunity to earn rebates, claiming for home office expenses must be carefully considered, SARS Commissioner, Edward Kieswetter cautioned Taxpayers during a SARS briefing in July. He said that the decision to claim for working from home expenses by using your primary residence could have long-term implications on your capital gains for tax purposes. “The home office area will, on a pro-rated basis, be excluded from the primary residence exclusion of R2 million on disposal of the residence”, states SARS. In other words, that area will be seen as business premise and not as a residential area, which could affect you when deciding to sell your house.

The idea of claiming for expenses incurred from working remotely is good, except one needs to evaluate the impact it has in the long-term. Meanwhile most employees have earned more benefits and savings by working from home resulting in reduced expense on items such as costs on fuel and transportation to and from work.

“It is also wise that taxpayers take precaution when it comes to claiming with SARS, as some claims may offer more short-term benefits than long-term gains. Working from home has benefited both employers and employees but for the benefit of claiming, employees should look at the long-term effects of deeming parts their residential areas as their employment domicile as this may not be easily reversible”, said Refentse Masha Axcelerate’s Managing Director.

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