With the start of the new roaring twenties South Africans have already faced a hike in petrol prices, among other tax increases…meaning many are feeling the pinch even more than usual.
For those who choose to reap the benefits of working from home however, whether through self-employment or career flexibility, there may be a way to get back some of your hard-earned money from the taxman.
However, there are certain conditions that must be met for SARS to allow a claim of home office expenses according to Gerhard Kotzé MD at RealNet Properties.
It’s all about where you work
When we say working from home, this tip doesn’t apply if you are doing so from the comfort of your living room. Anyone hoping to benefit from this must have a dedicated office space in their home which must be “permanently set up for work and properly equipped with whatever you need to do your job, such as computers and office furniture.” However, this is still applicable if the room has been converted into an office from your garage or disused bedroom.
Time is money
A very important qualifying factor covers your job specifications and how much of your income comes from a salary. If this amounts to more than 50% the only way to claim your money back is if your employer needs you to be home based or allows this and if you spend more than half of the hours you work at home.
Kotzé says there is an alternative possibility though, arguing that: “you should qualify if most of your income (more than 50%) comes from commission and your employers do not provide you with an office at their expense, thus making it necessary for you to have a home office. And you will definitely qualify if you are a small business owner or a freelancer who always works from home.”
Calculate your space
In order to calculate just how much money you can claim back, you have to firstly calculate the size of your home office in square meters and then work this out as a percentage of the total of your home. For an easy way to do this you can use this online square area calculator to help.
Employees on a salary who qualify can deduct this percentage of the total cost of anything relating to their home, such as repairs, maintenance and cleaning costs, rent or interest on a bond or rates and taxes.
For commission earners, Kotzé says this same percentage deduction is also applicable for their business expenses, for example stationary, courier services or repair of office equipment down to the cost of phone chargers. Contrastingly, “sole proprietors and freelancers can deduct all their business expenses.”
One important note to remember however is that you cannot deduct capital expenses, for example the cost of buying the office equipment or furniture, or the expense of building a separate office structure in your home.
Finally, he recommends consulting a professional such as a tax practitioner or your accountant and getting them to claim anything that you are allowed for working at home, stating: “It could make all the difference to a tight household budget this year.”