Tax Deductions for Home Expenses

• South Africa

• Other

07-10-2020

In light of the Covid-19 pandemic there has been a significant increase in employees having to work from home. Following from the national lockdown, many businesses have started looking at the possibility of having employees work from home for an extended period of time to save costs.

This has however resulted in an increase of expenses for employees working from home.

Employees are able to claim tax deductions for home office expenditure, provided that they meet the requirements of Section 11(a), read together with Section 23(b) and (m) of the Income Tax Act 58 of 1962 (the “Act”).

According to Section 23(b) of the Act, home office expenditure included expenses such as phone costs, office equipment and stationery, cleaning fees, rent of premises, interest on bonds, cost of repairs to a premises and other expenses in connection with the wear and tear of the premises.

In terms of the Act, an employee can claim a tax deduction for expenses incurred in working from home, if the employee works from home for at least six months of a tax year.

In order to meet the requirements in the Act, the employee’s home office must be specifically equipped for work, which includes a dedicated work area. This means that employees who share a work area with family members or employees working from their dining room will not qualify for the tax deduction.

As a result of the national lockdown, many employees are in a situation where they are forced to work from home, without a designated office space or reimbursement for additional expenses incurred.

We will soon be faced with the question as to whether the provisions of the Act are fair and equal in light of our Constitutional principles.