Tax filing season starts on 1st July. A quick reminder to those individuals who have been mainly working from home this last year..
If you want to claim “home office” expenses:
- An office, appropriately equipped, must have been set up at the place of primary residence;
- The office must have been used regularly and exclusively for work purposes;
- The office must have been used for more than 50% of the employee’s duties or, if the employee earns more than 50% of their remuneration from commission or other variable payments based on work performance, more than 50% of the employee’s duties must have been performed away from the employer’s office;
- Any home office expenses must be linked to employment use and must be verifiable; and
- Home office expenses must be claimed against source code 4028 in the income tax return.
Once you formally designate a portion of your property as an office and start claiming “home office” expenses, it will adversely impact the tax exclusions when/if you sell the property.
There is a high likelihood that a taxpayer who claims home office expenses for the first time will be selected for verification or audit – so be prepared. Have all the documentation in order.
Typical expenses that may be deductible for home office include:
- bond interest (ONLY up to 2022 tax year)
- rent of the premises;
- cost of repairs to the premises; and
- expenses in connection with the premises, which could include:
- rates and taxes;
- cleaning costs; and
Other typical expenditure that may qualify for a separate deduction in respect of maintaining a home office, include:
- general wear and tear on items used for trade purposes in the office;
- office equipment, furniture and fittings, and repairs thereto;
For more on how it all works, here’s the SARS link:
For a quote to assist for your individual and/or company tax returns, contact us here.