Tax season: Does your home office qualify?
It’s been a tough year and many of us are interested in seeing whether we can claim additional expenses in our personal tax returns. For those of us who are working from home, the ability to claim home office expenses in our tax return is definitely attractive.
However, simply working from home or having a home office is not enough to qualify you to claim home office expenses in your personal tax return.
The South African Revenue Service (SARS) has outlined the following requirements for people wishing to claim expenses.
- You must have a room in your home that is “regularly and exclusively used for the purposes of your trade”, says SARS. This means that if you have allocated a portion of your bedroom or dining room, as an example, for your home office you will not qualify. This is because it will be very difficult to prove that this portion of the home is used exclusively for work purposes according to SARS.
- Your home office must also be specifically equipped for the purposes of work. This could include items such as a desk, chair, computer, printer and other elements that are specific to the type of work you do. Importantly, having items in the room that speak to home or personal use, such as an ironing board, could nullify your claim.
- If you share the home office with another person, it needs to be clearly divided and meet other qualifying criteria. “Evidence such as photographs of the room showing the clear division should be taken often. If there is no clear division of the room between the spouses, and for example, they share a desk, then the exclusivity requirement will not be met and no deduction may be claimed,” says SARS.
- If you receive a salary or similar type of remuneration, then you are required to have worked primarily from home to qualify for expense claims. This means you must have worked in your home office for over 50% of your working time.
- If more than 50% of your remuneration consists of “commission or variable payments based on your work performance”, then you must have performed less than 50% of your work in an office provided by your employer.
When claiming for home office expenses, you will need to demonstrate that you qualify for such deductions. This includes pictures, floor plans and confirmation letters from your employers. Remember, SARS officials could do an inspection to confirm your claims and all documentation needs to be kept for 5 years in the event of an audit.
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