Working from home: tax relief tips
Covid has led to many full-time employees not going to the office
Taxpayers may be able to claim tax relief for additional household costs if they have to work from home on a regular basis, either for all or part of the week. This includes those who have to work from home because of the coronavirus.
Normally only independent contractors and commission earners would claim these expenses, but the SA Revenue Service (SARS) has confirmed that relief is also available to full-time employees, but only in the specific circumstances set out in the Income Tax Act.
In considering whether to claim, it is important to note that there have been no changes to the legislation in relation to a “home office”.
In brief, this means an appropriately equipped home office must have been set up at the place of primary residence and 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. In addition, any home office expenses must be linked to employment use and must be verifiable, and the expenses must be claimed against source code 4028 in the income tax return
SARS commissioner Edward Kieswetter
said: “We understand that many employers, and employees alike, are grappling with establishing a new normal.
“We would simply ask taxpayers to consider carefully the longer-term implication of defining an area in their primary residence as a home office for tax purposes. It may be more prudent to wait and establish a more sustainable rhythm before making the decision,” he said.
While all claims for home office expenses may be subject to further verification or audit by SARS, it is important to note that there is a high likelihood that a taxpayer who claims home office expenses for the first time will be selected for verification or audit.
Home office expenditure is rent of the premises, cost of repairs and expenses in connection with the premises. In addition to these expenses, other typical home office expenditure that may qualify for deduction include phones, internet, stationery, rates and taxes, cleaning, office equipment and wear and tear.
As an employee, you have to get a letter from your employer to confirm that you are working from home, retain invoices and statements of these expenses, and keep a running spreadsheet of days worked at home for the tax year.