Independent contractors and employees who earn commission may claim home-office expenses from SARS. This benefit has been extended to full time employees who worked or who continue to work from home due to the national lockdown resulting from the COVID-19 pandemic.
Employees working from home have additional expenses as they find themselves sharing their private space with Clients or making use of more electricity due to computers or other equipment which is needed for an employee to successfully complete their duties. These expenses are usually covered by the employer at the workplace, for example, electricity, water, rent etc. Since the employee is now making use of their personal resources to fulfil their job description to complete their duties, they are entitled to claim for the expenses incurred while carrying out their work duties from their home.
The Income Tax Act 58 of 1962, as amended, hereinafter referred to as ‘the Act’ makes provision for employees who earn a fixed salary and who work most of their time from home, to claim for expenses which ordinarily would have been the duty of the employer to cover. Issue 2 of the notes on Tax, is a list of expenses which can be claimed for and includes the following: rent of premises, interest on bond costs, cost of repairs to premise, phone costs, stationary, rates and taxes, cleaning, and office equipment.
However, the Act places a duty on the taxpayer, before claiming for these expenses, to comply with 2 (two) requirements. These requirements are set out in S11(a) of the Income Tax Act read in conjunction with Sections 23(b) and 23(m). Firstly, the space which is dedicated to the employee to fulfil his/her job must be specifically equipped in a manner which contains the necessary resources for the employee to trade and should be regularly and exclusively used for this purpose. This comes down to a person who revamped an extra bedroom for instance or who has equipped a study to be an office.
Secondly, the employee must exercise the majority of his/her duties towards an employer from this space which is allocated for work purposes. SARS will require a written agreement or communication between the employer and the employee, where the employer is instructing the employee to mainly carry out his/her duties from home. Additional expenses such as internet, water and electricity, security cost or insurance on your property or the equipment of your employer can also be claimed for from SARS.
If the employee wants to claim for these expenses, he/she should have at least worked more than 6 months from their home office within the 2021 financial year and must carry out more than 50% of their duties from this space. The expenses are calculated in equal portions (pro rata) basis, for example, the amount of electricity being used to operate the equipment in comparison to the electricity spend by the entire household. However, an employee will not be able to claim from SARS for these expenses if the employer has compensated the employee for all expenses incurred while working from home.
If you meet these requirements and you need further advice on who can claim or what expenses can be claimed by SARS, then contact our offices at BBP Law Attorneys for assistance.
Falon Lee Mars