BUSINESS NEWS - In the 2020/21 virus riddled tax year, many people have been working from home, either full- or part time.

But don’t think it will be easy to claim your home office expenses back from Sars. And, it may end up costing you money if you do.

The taxman warns that while all claims for home office expenses may be subject to verification or audit, there is a high likelihood that a taxpayer who claims home office expenses for the first time, will be thoroughly checked out.

On top of this there are also other factors that may just not make it worth it to put in a claim.

Defining part of a primary residence as a home office will most likely have an adverse impact on a future capital gains determination. If you sell your house, the home office area will, on a pro-rated basis, be excluded from the primary residence exclusion of R2-million.

Working from home could also have led to savings like transport and wear and tear on vehicles.

Added to the loss of part of the capital gains exclusion, these savings may outweigh the benefit of a claim.

No changes have been made to the legislation in relation to a “home office” and legal requirements remain the same as before the pandemic.

Sars offers the following guidelines for those working from home:

• 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.

SARS Commissioner, Edward Kieswetter says he understands 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. It may be more prudent to wait and establish a more sustainable rhythm before making the decision.”

Kieswetter stresses that the above guidelines do not replace the actual text of the provision in the Income Tax Act, 1962, nor the guidance on the SARS website. Taxpayers who require further assistance may refer to www.sars.gov.za.

For more information, contact SarsMedia@sars.gov.za.

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