With more and more people working from home, it’s important to understand how this could impact your tax returns. In South Africa, you may be eligible to claim home office expenses as a deduction on your tax returns if you meet certain qualifications. Here are some key things to know:
Eligibility Requirements:
To qualify for a deduction on your tax returns, you must meet the following requirements:
- You must have worked from home for at least 6 months of the tax year.
- You must have an allocated area of your home that is specifically equipped for your trade. This means that the area must be used exclusively and regularly for work purposes.
- You must be self-employed or work for an employer who does not provide you with a physical office space.
- You must be responsible for paying for the expenses you wish to claim.
Expenses You Can Claim:
If you meet the above requirements, you may be able to claim the following home office expenses as a deduction:
- Rent or bond interest
- Repairs and maintenance
- Municipal rates and taxes
- Cleaning expenses
- Stationery and office equipment (up to R7,000 per year)
- Wear and tear allowances for office equipment (up to R5,000 per year)
Calculating Deductions:
To calculate the amount you can claim as a deduction, you must determine the proportion of home expenses that can be attributed to your home office. This should be done in proportion to the percentage of your home that is used as a home office. For example, if your home office takes up 20% of your home’s total area, you can claim 20% of the above expenses as a deduction.
Tips for Claiming Home Office Expenses:
- Keep accurate records of all expenses and invoices related to your home office.
- Be sure to only claim expenses that are directly related to your work.
- Do not estimate expenses, as SARS requires exact figures.
- Be aware that claiming home office expenses may increase your chances of being audited by SARS.
Definitions:
- “Home office expenses” – Expenses incurred by an individual while working from home for the purpose of trade.
- “Allocated area” – A specific section or space in an individual’s home that is designated for work purposes.
- “Specifically equipped” – Refers to having the necessary equipment and tools required to carry out an individual’s work responsibilities from their home office.
- “Regularly” – Refers to the frequency at which an individual uses their home office for work purposes.
- “Exclusively” – Indicates that the part of an individual’s home used for work purposes must only be used for that specific purpose and not mixed with private use.
- “Wear and tear allowances” – The amount of money an individual can claim back for the gradual deterioration of office equipment used for work purposes.
- “IRP5” – A tax certificate issued to an employee by an employer at the end of each tax year that details the employee’s salary and other benefits received throughout the year.
- “ITR12” – A form used by individuals to file their annual tax returns with SARS.
In conclusion, if you’re working from home in South Africa, it’s worth checking if you meet the eligibility requirements to claim home office expenses as a deduction on your tax returns. Just remember to keep accurate records, only claim expenses that are directly related to your work, and be aware of the potential risks involved. With these tips in mind, you could potentially save money on your taxes while enjoying the convenience of working from home.
