You may have to work from home until October to claim home office expenses against tax
- If you are working from home because of the coronavirus disaster, you can claim home-office expenses against tax, as essential to earn your income.
- That can even include part of your mortgage payments.
- But to qualify, many people in traditional jobs will need to keep working from home until at least the end of September, specialist consultants say.
- For more stories go to www.BusinessInsider.co.za.
If you've suddenly been forced to work from home due to the coronavirus crisis, there could be a tax break waiting for you. Under South African tax rules, the cost of working from home is an expense you can offset against the money you earn by doing so.
But if you go back to the office before the end of September, you may miss out.
Those who qualify can claim all their expenses in working from home, including airtime, electricity, and even a part of their rent or mortgage payments, say Remuneration Consultants South Africa's Darren Britz and Laurence Mbokwane.
That is automatically true for people who earn more than half their annual income on commission, or who are independent contractors.
But workers in "traditional employer-employee relationship earning a salaried income have the expectation and general understanding that the employer is responsible for business expenses," say Britz, who is an attorney, and Mbokwane, who is a tax consultant. People in that position may not claim their expenses – unless they work from home long enough.
"The most important test for claiming expenses is that the person must have spent at least 50% of their time in a tax year working from home.
"This means that people will have to continue working from home until at least the end of September for them to be able to claim (six months since lockdown)."
In that case employees who cover their own costs can claim those costs back come tax time.
Things get a little more complicated if a company covers the cost of working from home with upfront payments.
"This has the risk of attracting fringe benefits tax. It becomes a fine line whether the costs were incurred to fund business expenses or if it was used for the employee’s personal benefit," says Remuneration Consultants.
"The ideal position would be through reimbursements. It does not sound fair to the employee, but the better approach would be for them to incur the costs and then to claim it as a reimbursement from the employer.
"It will be easier to submit proof (invoices and receipts) that the expense was for business purposes than having received a cash amount paid and having to prove how it was used."
There is one important caveat to claiming costs against tax: you need to have a dedicated work space, and must be able to prove that it exists.
"This is not simply a table in the corner of a room. It must resemble an office when [the SA Revenue Service] comes knocking," says Remuneration Consultants.
"People who have been working from home temporarily and just 'made-do' in the short term (using the dining room table as their workspace) should abandon claims for tax deductions. We would not recommend they pursue this route seriously."
(Compiled by Phillip de Wet)
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- Covid-19: All the financial help and information you need
- These businesses must remain shut during Level 3
- SA joggers run routes that create pictures - take a look at their cool GPS art
- 8 countries have coronavirus death rates above 10% — here's how SA compares
- Hairdressers will help 'stabilise' a stressed SA, salons argue in a fight against lockdown
- Smile and wave, boys! Penguins take over Cape Town aquarium