If you used to work at an office and now work from home during lockdown, and continue working from home, you can claim a tax deduction if it’s for six months or more.

There’s catch though: you can claim if you set up and use your home office exclusively for work and nothing else.

“You can therefore claim for your home office if you started working from home at the end of March and continue until September to deduct this benefit in the next tax year,” says Nicci Courtney-Clarke, head of tax at TaxTim.

She explains that it’s worth understanding the tax rules around home office expenses, as SARS may allow employees to deduct their home office costs within the “Other deductions” section of the ITR12 (your income tax return).

However, she points out that it is important to realise that this deduction is only allowed under certain specific conditions.

This situation is different for sole proprietors or freelancers who work from home because they can automatically deduct all their home office expenses. They also do not have to meet the same stringent conditions to qualify for a deduction, Courtney-Clarke says.

The requirements for deducting home office expenditure are:

  • Your employer must allow you to work from home.
  • You must spend more than half of your working hours working from your home office.
  • You must use an area of your home exclusively for working, such as a separate office. Working from your dining room table does not qualify as a home office. Your home office must be specifically equipped for your trade with the relevant instruments, tools and equipment required to do your work.

You can deduct these expenses depending on how you are paid:

  • If you are a commission earner, where more than 50% of your total remuneration is from commission or some other variable form based on your work, you can deduct rent, interest on your bond, repairs to the premises, rates and taxes, cleaning, internet, wear and tear and all other expenses relating to your house, as well as other commission related business expenses, such as costs for telephones, stationery and equipment repairs.
  • If you are a salaried employee with variable payments or commission making up less than 50% of your total remuneration, you can deduct rent, interest on your bond, repairs to the premises, rates and taxes, cleaning, internet, wear and tear and all other expenses relating to your house only.

To determine your home office deduction, you have to calculate the total square meterage of your home office in relation to the total square meterage of the house and convert this to a percentage. This percentage is then applied to the home office expenditure to calculate the portion that is deductible, Courtney-Clarke explains.

 

Case study

Thuli is a graphic designer who works for Company A. Her remuneration consists of a salary only. Her company promotes a flexible work culture and therefore allows Thuli to work from home three days per week.

Thuli has a separate office at home, fitted out with a computer and printer, which she uses exclusively for her graphic design job.

The computer and printer were bought two years ago for R12 000 and R8 000 respectively. The size of her office is 20m² and the floor space of her home, including the office, is 200m². It is assumed that SARS allows for a three-year depreciation period for the computer and printer.

During the tax year she incurs the following expenditure:

* R120 000 interest on her bond;

* R36 000 for rates and electricity;

* R36 000 for the cleaner;

* R5 000 for roof repairs; and

* R12 000 for her cell phone expenses.

Based on this, Thuli qualifies for a home office deduction. The square meterage of her home office (20m²) in relation to her house (200m²) is 20/200, which is 10%. Therefore, Thuli’s home office deduction for the tax year = 10% X (R120,000 +R36,000 + R36,000 + R5,000) + R6,666 = R26,366. Since she is not a commission earner, her cell phone expenses are not deductible.