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Claim these WFH tax deductions
Do you work from home? There are expenses you can claim on your tax return.
If you work from home, there’s a good chance you can claim a portion of your expenses as a valid deduction against your tax bill. This is because the South African Revenue Service (SARS) allows home-office expenses to be deducted from your taxable income.
It’s worth knowing how to get some tax money back.
Who can claim?
You can claim if you're a full-time employee using part of your home as an office for at least 50% of the past tax year.
But the space that you use at home must be reserved exclusively for the purposes of work. So, that excludes you if you've been working on one end of your dining room table or on the couch where you relax later to watch TV.
What can you claim?
The reason why SARS allows you to claim these expenses is that you would not have to incur these costs if you worked from your employer's office. So, you’re now able to recover a portion of the money you spent so that you could work more effectively from home.
Operational expenses for which you can claim the full cost includes your phone calls, internet connectivity, stationery, cleaning supplies, even office equipment and wear and tear.
Other property-related expenses – like your rent, rates and taxes – can be claimed only as a portion of your home office’s floor area. For instance, if your office is 10m2 and your house is 100m2, then you can claim 10% of these expenses.
Unfortunately, any remodeling or renovations you made so that you can work more effectively from home cannot be claimed as a valid expense. The situation is a little different with repairs, though: if you had to make repairs only to the specific area you use as a home office, then the full cost can be claimed as a deduction. If you do general repairs to the whole house – say, the roof – then you can once again only claim a pro-rata percentage of those costs as a deduction.
How is it calculated?
SARS has been kind enough to share the formula it uses to calculate how much you claim as a deduction.
You first need to split your operational costs from your property-related expenses. This is because only property-related costs get split as a proportion of your home office space.
But you can only claim operational expenses that are actually used to work from home. For example, you cannot claim your full monthly internet bill if you also use that same connection for personal things and entertainment. In cases like this, you’ll have to estimate how much of your time or usage is for work, and how much is for pleasure.
SARS has an entire page dedicated to home office expenses if you need more detail. Alternatively, speak to your tax consultant
Once you’ve calculated these property costs, you use the SARS formula as follows:
A / B x total costs
A = the m² measurement of your home office space
B = the total m² of the residence (including outbuildings and your home office)
Total costs = the costs to stay or own and maintain the property
Assuming your workspace is 10m2 (A in the formula) and your home is 100m2 (B in the formula) your tax deduction claim could look something like this:
Tax deduction claim example
|
|
Monthly |
Annual |
Proportional claim |
|---|---|---|---|
R7,500 |
R90,000 |
R9,000 |
|
R500 |
R6,000 |
R600 |
|
R1,200 |
R14,400 |
R1,440 |
|
R1,000 |
R12,000 |
R1,200 |
|
R1,000 |
R12,000 |
R9,600 |
|
R800 |
R9,600 |
R7,680 |
|
R350 |
R350 |
||
R5,000 |
R5,000 |
||
R1,500 |
R1,500 |
||
R36,370 |
This figure of R36,370 is the amount you can deduct from your taxable earnings to determine your full tax for the year. You need to enter this amount under the ‘Other deductions’ section of your ITR12 tax return, in the block for Home Office expenses.
SARS has an entire page dedicated to home office expenses if you need more detail. Alternatively, speak to your tax consultant about claiming back part of all the expenses you’ve incurred with working from home.
