The one deduction SARS doesn’t want you to know about

The 2023 tax season opened on July 7 2023 and closes in less than two months on October 23 2023. The tax experts from TaxTim alerted us to the one tax deduction SARS does not want South Africans to know about. Here’s everything you need to know about deducting expenses on a home office.

THE ONE DEDUCTION SARS FEARS THE MOST

Working from home, flexi-time, whatever you want to call it, the way most of us work has changed massively since COVID. What all this disruption to the usual 9am-5pm work schedule means is that many South Africans are justifiably claiming deductions on a home office.

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But as TaxTim iterates, it’s very important you fully understand the tax rules around a home office, because it is the one deduction SARS monitors closely. SARS allows you to claim a tax deduction for a home office under “Other Deductions” on your income tax return (ITR12), but only under these conditions …

DIFFERENT TYPES OF WORK

Whether you’re a sole proprietor, freelancer or commission earner, SARS will except a deduction on a home office. All you need do is produce the following:

• You need a letter from your employer saying you’re allowed to work from home. See an example letter HERE.
• You must spend more than HALF of your total working hours working in your home office.
• To claim this SARS deduction, you must have an ENTIRE ROOM in your home, which is used exclusively for the purpose of work. Working on the dining room table, etc, does not count.
• SARS is strict about this, often asking for evidence in the form of photographs and floor plans.
• TaxTim warns, if you do not meet ALL of these requirements above, your deduction will be denied.

WHAT EXPENSES CAN YOU CLAIM?

SARS assesses the taxpayer’s remuneration structure like so:

• If you’re a commission earner who makes more than 50% of your total remuneration from commission you can deduct rent, repairs to the premises, rates and taxes, cleaning, and all other expenses relating to your house. Plus you can claim any business expenses (e.g. internet, telephone, stationery, repairs to printer etc.).
• If you’re a normal salaried employee who happens to work from home, you can deduct rent, repairs to the premises, rates and taxes, cleaning, wear and tear and all other expenses relating to your house only. But you CANNOT claim business expenses (e.g. internet, telephone, stationery, repairs to printer etc, these should be covered by your employer, says Tax Tim.
• Note that interest on bonds is no longer be allowed as a home-office as of the 2023 tax year onwards. You must calculate the total square meterage of your home office in relation to the total square meterage of your house, and then convert this into a percentage. Apply this percentage to the home office expenditure in order to calculate the deduction.

EXAMPLE CASE

Let’s say you are a salaried employee and thanks to flexi-time you work three days a week from home. You bought a computer and printer for R12 000 and R8 000 respectively. You can deduct those. Let’s say your home office is 20 square meters, and the floor space of her entire home (including the office) is 200 square meters. Therefore, the office is 10% of the house.

During the tax year you might incur the following expenditure:

Expense	Amount
Rent	R120 000
Rates and electricity	R36 000
Cleaner	R36 000
Roof repairs	R5 000
Cell phone expenses	R12 000
	R209 000

Accordingly, your home-office deduction for the year could look like this:
10% x (R120 000 + R36 000 + R36 000 + R5 000) + R6 666 = R26 366

If you need further assistance, we encourage you to use TaxTim’s handy Home Office Calculator HERE.

This article is for informational purposes only and should not be construed as financial, tax or legal advice. For further details consult the SARS website or get in touch with a tax specialist, like TaxTim.

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