COVID-19 forced business owners, employees and entrepreneurs into full-time remote work. While office spaces have slowly opened up over the last few months, we spent a significant amount of time setting up and working in our home work spaces in 2020. A number of business owners have moved back to the office, but many have not, and adopted a fully or at least partial remote work situation.
If you’re one of those business owners who have settled fully into the remote work setup, or even recently made the switch to working from home, there are some financial benefits, thanks to the South African Revenue Services (SARS). Without an offsite office space, you are now potentially spending more money on your and your employees’ home office setup. We look into how to claim tax back from SARS, on the business costs you incur.
Who is eligible to claim back from SARS?
You are eligible to claim tax back from SARS if you are an independent contractor, a commission earner or a full-time employer or employee. But, just because you meet this initial requirement, doesn’t mean you are automatically able to claim back.
On top of being an an independent contractor, a commission earner or a full-time employer or employee, you must meet the following requirements in order to claim:
- You have a dedicated work space used for work purposes only
- Your dedicated workspace has the necessary equipment needed for work purposes
- You have used this workspace for a minimum of six months during the relevant tax year
- As an employee, you have a letter from your employer that confirms that you can work from home and how much time is spent in your dedicated workspace
If you are a freelancer or sole proprietor you do not need to meet these requirements in order to qualify for a tax deduction on your work from home expenses.
What expenses can I claim back from SARS?
If you meet the above requirements, below are the work from home expenses you can now claim for:
- Rent or a portion of your bond interest
- Rates and taxes, including water and electricity
- Home cleaner’s salary
- Repairs to home office space including furniture and equipment
- Stationary and data
Unfortunately, phone bills do not qualify as a work from home, tax-deductible expense, unless you earn more than 50% of your total salary in commission.
How do I calculate my home office expenses?
Now that we’ve outlined who qualifies and what expenses can be claimed for, the next step is to calculate how much you can claim back when you submit your next tax return.
The amount you can claim back depends on the size of your workspace, relative to the size of your entire home in square metres. TaxTim’s Home Office Calculator can do all the sums for you. If you wish to claim back for these expenses, they will not be added if you choose the auto-assessment. You will have to add these to your tax return yourself.
In order to arrive at the correct amount you would like to claim back for, you will need a record of all your business-related costs and, “Make sure that you have all supporting invoices to back up your home office expense claims, should SARS require the proof”, notes local accounting, tax and advisory firm, Smith & Rossi.
Whether you’ve been working remotely for some time, or have just taken a full-time leap into it, the ability to claim for businesses expenses is a benefit to be taken advantage of, particularly if you’re still in the startup phase and are stretched for funding resources.